Instem’s trading update for the year ending Dec-15 caps a strong year for the group and should be well received. The outlook remains positive both in terms of the general market backdrop, which is undergoing a robust recovery, and specifically Instem’s position within it. Recurring revenue (representing at least £9.6m of the c. £15.8m total for the year) continue to increase and the order backlog entering the new year is healthy. We continue to see potentially material upside over the next few years on the back of the FDA’s new SEND initiative in particular. The shares remain good value on a FY16 EV/NOPAT of 16x for a forecast 3yr CAGR in EPS of 17%.