AIM-listed pharma firm enjoyed currency tailwinds after GBP lost 12% vs the Euro
Companies: Allergy Therapeutics plc
Investors awoke to some good news from British pharma firm Allergy Therapeutics on Thursday morning as the company released a statement saying it expected revenues to be ahead of expectations when it publishes its interims later this quarter.
In a regulatory news announcement, the AIM-listed firm said revenues for the six months to 31 December were expected to be £40m, up from £29m in 2015, with organic growth of 17.9% and reported growth of a whopping 39.3%.
Revenues were aided by currency translational benefits, as the firm earns a significant portion of its sales in the Eurozone, with sterling losing c.12% of its value against the Euro during 2016.
"This growth reflects continued strong momentum across the majority of the Company's key markets...
...The main contributions in terms of net sales growth were generated in Germany, Austria, Spain and The Netherlands."
However, the strength of the Euro against Sterling also led to higher overheads and R&D costs, which are reported in the UK but incurred in continental Europe.
The Group says growth is being seen across the whole of its portfolio but confirmed that its "ultra-short course aluminium-free therapies" was the main contributor to revenues.
Zeus Capital and Panmure Gordon both put out notes on AGY on Thursday morning, with the former saying:
"(AGY)... has highlighted a period of strong growth in revenue, driven through gains in market share and also currency movements..."
Zeus retained its buy rating on the stock and revised its target price to 69p:
"The company had cash of £27.8m at December 31st 2016. We have revised our financial forecasts for the coming years with increases in sales and gross margins as well as overheads. Our risk-adjusted fair value estimate now stands at 69p per share (previously 66p)."
Panmure Gordon also increased its revenue forecasts for FY17E and FY18E, raising each by 5.5%. Analyst Dr. Mike Mitchell said the company has made good progress, and the stock still represented an excellent opportunity for investors "given the current levels and trajectory" of sales.
CEO Manuel Llobet said he was confident about the full-year and excited about the prospects for the company in Europe:
"The Company's progress continues according to our long-term plans both in gaining market share in our main territories and with our clinical development. Our 18% top line organic growth in real terms reflects the quality of our products, technology and team, and the underlying convenience of our ultra-short course vaccines."
Shares in AGY opened up 2% from Wednesday's close.
