AIM-listed firm's results expected to be "materially higher" than forecasts
Companies: EKF Diagnostics Holdings plc
The AIM-listed point-of-care business EKF Diagnostics (lSE: EKF) has said that trading in Q3 of the current financial year was "materially higher" than its expectations and at a run-rate that would beat market forecasts.
The company says it is now confident of achieving strong 2016 revenues and adjusted EBITDA, which it believes will exceed the top end of current market forecasts.
Along with its trading update, EKF announced that cash generation in Q3 had been strong and its debt position had "improved considerably". The business expects to be cash positive in the next 12 months, alongside continuing investment during Q4 and early 2017. Its CAPEX will increase as it increases consumables capacity in Germany and replaces equipment in the U.S.
Two brokers put out their views on today's announcement, with Panmure Gordon saying the Q3 trading update indicated that both sales and EBITDA were expected to be "materially" above budget:
"...expectation that FY16 will ‘exceed the high end of forecasts’ for both revenue and EBITDA. Our current forecasts of £33m revenue and £3.9m EBITDA, are already at the high end of previous guidance (revenue of over £30m and EBITDA of £3.5 – 4m). We will update our forecasts shortly..."
N+1 Singer also put out a note:
"EKF has followed up its encouraging interims with a positive Q3 update. Trading is reported to be ahead of both budget and at a run-rate in excess of market expectations. The company is now confident of exceeding the high end of market expectations for the full year. As a result, we upgrade our FY16 revenue forecasts by 9% to £34.7m and EBITDA by 29% £4.9m. The recovery in the business is now clearly gaining momentum..."
The city had predicted the above expectations results on 30 September, according to the Financial Times, but investors must have missed that one as it's up nearly 18% this morning.
