We report on the performance of our momentum style screen since the last refresh three months ago and present the 25 new constituents. The screen underperformed small-cap and microcap indices modestly, though our previous focus stocks did significantly better. While momentum (as we express it) has outperformed smallcap significantly since inception of the screen in July 2016, this has arisen in shorter periods and appears to only coincide with a steadily rising small-cap index. We therefore consider this style screen to have limited predictive capability. We highlight seven stocks, which we think are interesting.
Companies: BMY CKT KEYS LGT MACF VER WYG
Edison Investment Research is terminating coverage on Vernalis (VER). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
PROACTIS Holdings (PHD LN) New brand identity | Vernalis (VER LN) Tris Pharma liability clarified, sale talks underway (Hold to Not Rated) |
Companies: PROACTIS Holdings PLC (PHD:LON)Vernalis (VER:LON)
Cake Box Holdings—franchise retailer of cakes with a growing store base across the UK looking to join AIM, Offer tbc, expected late June
Mind Gym. Behavioural science business that uses scalable proprietary products to deliver human capital and business improvement solutions to large corporations. Offer TBA. Due 28 June
Anexo -specialist integrated credit hire and legal services group. Offer TBA. Due 19 June.
i-nexus—develops and provides strategy execution software to assist global enterprises in effective execution of their strategic plans and initiatives looking to jon AIM. Offer TBC, expected 19 June
Yellow Cake will use its expertise to generate value through the ownership of physical U3O8 (Uranium) together with a range of activities and opportunities connected with owning physical U3O8. Acquiring supply contract for up to $170m. Offer TBA.
Tekmar— technology provider of protection systems for subsea cable, umbilical and flexible pipes and offshore engineering services—Offshore wind farms and Oil & Gas. Revenue of £21.9m and Adjusted EBITDA of £4.9m Offer TBA
Knights Group— UK regional legal and professional services businesses. FYApr18 rev £34.9 million and adjusted operating profit was £6.8 million excluding Turner Parkinson (acquiring on IPO). Offer TBA
TransGlobe Energy Corporation—an independent international upstream oil and gas company with headquarters in Calgary, Canada is looking to join AIM. No Capital to be raised, market cap of £131m. Expected 29 June
Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine, a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June.
Companies: MTFB STX VER ITM NWF KZG IMM ECSC BOOM
Avingtrans (AVG LN) Good progress on integration; FY19 PBT raised 13% | Devro (DVO LN) Upgrading to Buy on valuation and recovery grounds | Genus (GNS LN) H1’s in line with expectations: solid ABS performance | Vernalis (VER LN) Tuzistra® XR scrips below guidance: evaluating strategic options
Companies: AVG DVO GNS VER
Vernalis has provided a trading and operational update to its guidance for Tuzistra XR prescriptions for financial year-end 2018. Despite dynamic management of commercial initiatives, Tuzistra XR prescription growth is not accelerating fast enough to meet Vernalis’s guidance of 105-115k prescriptions (given at the FY17 results). Following a disappointing uptake in the current cough cold season (~65% of the season is complete), Vernalis is downgrading guidance on prescription numbers and, in light of slow progress in the US cough and flu business, is seeking alternative strategies for the US business and the group. As such, we place our financial forecasts and valuation under review until we receive clarity on strategic next steps and the potential impact on cash burn, given a cash balance of £44m (unaudited at 31 January 2018).
A look at what brokers are covering today, Thursday December 14.
The shortfall in prescription volume growth volume is disappointing, although we note our cautious stance vs. guidance for current-year prescriptions. We significantly lowered our rollout expectations for Tuzistra® XR and the four follow-on cough cold programmes on 24th November and will review our estimates following this morning’s update. The company enjoys a strong cash position of £48.9m (as per 11th Dec).
Advanced Medical Solutions (AMS LN) In line FY trading update | Infrastructure India (IIP LN) NAV declines further - financing discussions continue | IQE (IQE LN) Apple investment in VCSELs highlights upgrade potential | ReNeuron Group (RENE LN) Interim results and IND approved to commence Phase IIb in stroke | Severfield (SFR LN) Significant Google contract confirmed | Synairgen (SNG LN) Revised terms with Pharmaxis | Tribal Group (TRB LN) Financial performance materially ahead | Vernalis (VER LN) Trading update highlights Tuzistra® XR run-rate below expectations
Companies: AMS IQE VER SNG IIP TRB SFR RENE
Fusion Antibodies— Sch1 from the Belfast based contract research organisation providing services to biopharmaceutical and diagnostics companies that are involved in the development of antibodies for both therapeutic drug and diagnostic applications. Offer to raise £5.5m for the Company and £1.075m for selling shareholders at 82p with market cap of £18.1m. Due 18 Dec | Erris Resources PLC—a mineral exploration and development company currently focused on two geographic areas. Offer TBC, expected 21 December 2017 | CIP Merchant Capital—Closed ended investment Company. Sector focus oil & gas, healthcare, pharma, and real estate. Offer TBA. Due 21 Dec | Panthera Resources— The Company was established to act as a holding company for Indo Gold Limited, an unlisted Australian registered company. The Company aims to explore and develop gold assets in India and West Africa. Offer TBC, expected 20 Dec | Sumo Group—one of the UK's largest independent developers of AAA-rated video games providing both turnkey and codevelopment solutions, including initial concept and pre-production. Offer TBC. Due late Dec | Pelatro—provider of proprietary software solutions to enterprise-level customers for various aspects of precision marketing for use in B2C applications. Offer TBC, expected 19 December 2017 | Fusion Antibodies—contract research organisation providing services to biopharmaceutical and diagnostics companies that are involved in the development of antibodies for both therapeutic drug and diagnostic applications. Raising £5.5m at 82p plus £1.075mn vendor sale. £mkt cap £18.1m Due 18 Dec. | Sirius Petroleum—RTO. Becoming an operating company in the Ororo Field in Nigeria. Raising £7.2m/ Mkt Cap £35.6m. Due 19 Dec. | Bushveld Minerals—RTO of Bushveld Vametco and therefore 78.8% of Strategic Minerals Corporation, the intermediate holding company that owns a 75 per cent. interest in the Vametco Vanadium Mine. | Eqtec—Company with access to a proprietary advanced gasification technology used in industrial size power plants to convert waste into synthetic gas to generate electricity. Raising £1.6m. Mkt Cap £8.7m. Due 21 Dec | Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £71m market cap. FYMar18E rev £241.5m and £7.19m PBT | Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising. 2016 rev £0.7m and £7.3m operating loss. Offer TBA. Expected 19 Dec | OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal,
already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
Companies: BIRD VER OTC IQG PDZ MSYS REAT BCN
Future (FUTR LN) Results underline change and opportunity | IndigoVision Group (IND LN) Trading behind expectations; Chief Exec leaves | James Fisher & Sons (FSJ LN) Outlook unchanged; Offshore Oil recovery delayed | Sanderson Group (SND LN) Scaling up the Enterprise division | Speedy Hire (SDY LN) Earnings enhancing acquisitions | Vernalis (VER LN) Reduction in cough cold forecasts | WYG (WYG LN) UK challenges prompt further downgrades
Companies: SDY VER FSJ IND WYG SND FUTR
Tuzistra XR prescriptions (Rx) grew threefold to ~35k in FY16/17 (2nd year on the market) vs ~12k in FY15/16. Investment into addressing the barriers to higher Tuzistra XR prescribing is translating into higher Rx rates, although this has not been matched by revenue growth due to higher inventory stocking in the same period last year. In H217 FDA issued partner Tris with two complete response letters to Vernalis’s CCP-07 and CCP-08 NDAs and we now model launch during the 2018/19 cough cold season. Our updated forecasts reflect this and lower Tuzistra XR revenues due to a slower than anticipated sales trajectory in the near term.
See what's trending this week...
Futura Medical (FUM LN) H1 results: Eroxon® trial plan amended; licensing discussions underway | Goals Soccer Centres (GOAL LN) Further downgrades overshadow various strategic positives | Murgitroyd Group (MUR LN) Trading in line after record H2 performance | Oxford Instruments (OXIG LN) FY18 guidance maintained, but dependent on stronger H2 | Summit Therapeutics (SUMM LN) BARDA contract a major boost to ridinilazole | Vernalis (VER LN) Solid FY results driven by NCE collaborations; Tuzistra broadly in line
Companies: SUMM VER OXIG GOAL MUR FUM
FY results are ahead of our forecasts, mainly as a result of higher than expected NCE collaborative revenue, with Tuzistra™ XR prescriptions broadly in line. Following Complete Response Letters from the FDA for follow-on cough cold programmes CCP-07 and (post period-end) CCP-08, the share trades near all-time lows. Vernalis is currently working closely with Tris Pharma to resubmit the NDAs as soon as possible. We reiterate Hold.
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Robust FY21 performance forecast, despite pandemic
Companies: SDI Group plc
Ongoing strong demand for EKF’s products, both in the core business and the Primestore MTM Covid-19 sample collection device, means the FY20 outturn will be “comfortably ahead” of already upgraded expectations. This pattern is expected to persist throughout Q1’21 and beyond and management is confident that the performance in Q1 will be materially ahead of expectations. Having previously left FY21 estimates untouched, we are today putting through the first in what we expect to be a series of material upgrades. Given the dynamic situation around Covid-19, we expect regular updates throughout the course of the year and will adjust our forecasts accordingly as visibility over ordering patterns increases.
Companies: EKF Diagnostics Holdings plc
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
For many reasons, 2020 was a transformational year for Circassia as the new management team set to work streamlining the business, addressing legacy issues and positioning the group to benefit from the strong market position of NIOX, a gold standard diagnostic device for asthma. Whilst the pandemic has had an impact, recovery is underway, with Q4 revenues back to 86% of Q1 levels. The EBITDA breakeven point of the business has been reduced further to £32.0m and there was £7.4m of net cash on the balance sheet at the year end. Whilst the pace of recovery remains difficult to predict, the business looks well set for the medium term.
Companies: Circassia Group PLC
Allergy Therapeutics’ European commercial business remains resilient despite COVID-19 impacts. The H121 trading statement indicates sales growth of 7% (+5% CER), while steady pipeline progress is also being made. Recruitment and treatment in the G309 Grass MATA MPL Phase III study is on track, with post period key events including initiation of the P001 ex vivo peanut allergy biomarker study and publication of positive challenge chamber results for ImmunoBON in a peer reviewed journal. This bodes well for news flow delivery over the rest of calendar 2021. G309 results in the autumn are expected to inform design of the G306 pivotal grass trial; P001 data in the spring will support IND submission; and ImmunoBON is set to launch in Germany later this month. A record cash balance of £48m (at end-December 2020) covers nearterm requirements taking the company through to material value-inflection points. Ahead of H121 results on March 3, we maintain our £325m (51p/share) valuation.
Companies: Allergy Therapeutics plc
After an eventful 2020, ReNeuron released updated 12-month Phase ll data in January on its lead human retinal progenitor cell (hRPC) project. This continues to show a consistent and robust, sustained average gain in visual acuity in retinitis pigmentosa (RP). A continuation study in nine patients using two million cells is underway with three- and six-month data due over H2 CY21 and the first three patients treated. This will facilitate partnering negotiations. A pivotal hRPC study may start in 2022. Deals are possible in CY21 on the exosome genetic drug delivery platform, which could be very valuable. The valuation remains at £190m with strong cash.
Companies: ReNeuron Group plc
Diaceutics has rebased itself for growth. While the pathway to normalised expenditure patterns in the pharma industry will not be helped by new lockdowns, we believe the second half of 2021 onwards will see continuous budget improvements. Customer engagement with the new platform is positive and this is the key to securing the incremental financial benefits offered by taking the business fully online.
Companies: Diaceutics Plc
STX is a commercial-stage company delivering specialty products that address patients’ unmet medical needs, with an initial focus on treating iron deficiency (ID). Feraccru®/Accrufer® has been approved by the regulators in both Europe and the US. For various reasons, STX has been unable to secure a commercial partner for Accrufer in the US. Consequently, the board is now considering an STX-led launch option, thereby retaining all the US profits. Financial modelling shows the logic of this option, but it would necessitate financing the working capital requirements covering the next two years in the region of £25m-£30m.
Companies: Shield Therapeutics Plc
ReNeuron’s Dec’20 £17.5m raise now means the Group is sufficiently funded through key upcoming milestones for its lead hRPC candidate and the exosome platform – mitigating a previous pivotal issue. 2021 could promise to be the critical year for the Group, with the potential to unlock value from its programmes well beyond its current modest market value. We refresh our forecasts post yesterday’s analyst briefing, and reiterate our positive stance.
The six-month trading update to 31 December demonstrates solid underlying growth, with revenues rising 7% to £54.0m, or c.5% at constant exchange rates (CER), despite ongoing COVID-19 restrictions. Period-end cash was £48.3m, which implied a c.30% increase (+£11.3m) in underlying cashflows in the period. With relevant and potentially significant commercial and regulatory newsflow through 2021, we expect the shares to perform well. We leave our forecasts unchanged for FY 2021 at this point and reiterate our 45p target price, pointing out the substantial and unwarranted discount to its nearest peer (ALK-abello - 6.1x EV/Sales). This target also excludes the value for US market entry for Grass MATA MPL or its early-stage pipeline, including VLP Peanut allergy vaccine.
A year in which we expect the company to make significant advancements in the development and commercialisaon of LIGHT, AVO kicked off 2021 with a new financing partnership with specialist asset financing company DiamedCare and technical updates. With its differenated technical and commercialsoluon supported by growing clinical evidence base for proton therapy ("PT"), AVO remains well posioned to disrupt the radiotherapy market. We expect further progress in 2021 to connue to de-risk the AVO story, with much of the risk now lying on commercial execuon, in our view. Part of AVO's turnkey PT soluon, the new lessor financing agreement with DiamedCare covering Europe and the US should facilitate faster adopon in smaller radiotherapy centers which currently represent an underserved and largely untapped market. We maintain and reiterate both our OUTPERFORM recommendaon and 135 GBp target price.
Companies: Advanced Oncotherapy Plc
Alcon, a dominant force in the $25bn ophthalmology space, is set to outgrow the industry in the mid-term – driven by the pick-up in demand for recently-launched products, PanOptix and Precision1. Moreover, with robust margin expansion potential – led by an improving product mix and targeted cost-savings – earnings should grow healthily. A sturdy balance sheet increases its appeal further. Interestingly, Alcon is recovering faster than rivals from the COVID-19-hiccups and its sales and profitability profile should inflect once the situation normalises. Add.
Companies: Alcon, Inc.
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
The interim results to 31 October demonstrate the resilience of SDI’s business model, the benefits of having a diverse range of businesses and the attractions of the buy-and-build strategy. We expect the platform that SDI is building to appeal to many vendors, and the ability of management to source exciting businesses even during lockdown points to further upside. Revenues increased 23% to £14.1m in the period, underpinned by strong c.8% organic growth. Together with cost controls, this saw adjusted EBITDA rise 44% to £3.9m, with adjusted PBT and EPS up 52% and 45% to £3.0m and 2.47p, respectively. The results were characterised by strong operational cashflow, rising 130% (c.£2.7m) to £4.7m, with net debt falling by £3.7m to £0.3m. With the outlook for H2 underpinned by a large OEM contract due to be fulfilled by February, we reiterate our target price of 125p.
It has been a year the likes of which we have never seen before, and hope never to see again. The description of the impact of the CV19 pandemic as K-shaped certainly feels accurate, with some sectors being well placed to benefit from the creative disruption that has engulfed the world, accelerating structural changes, while others through no fault of their own have been severely impacted. This has been the case for the Dowgate portfolio of corporate clients, with our quoted clients falling into three groups. The first, comprising Cambridge Cognition, GRC, The Panoply, S4 Capital and Water Intelligence have on average seen their share prices double this year as structural changes accelerated by CV19 have been accompanied by strong execution. The second, comprising Franchise Brands, OTAQ and SEEEN, have experienced share price declines averaging a third as their businesses have either been directly impacted by CV19 or their growth aspirations curtailed. The final group comprises those companies which have been bid for this year, namely Be Heard, Hunters Property, Huntsworth and Reach4Entertainment. Looking into 2021, we expect continued strong performance from the first group and a rebound in the second as the world returns to normal. Finally, having completed Series A/B rounds for a range of private companies this year, we hope to bring these entrepreneur-led, growth companies to market in 2021.
Companies: COG FRAN GRC OTAQ TPX SFOR SEEN WATR