finnCap Research Company Notes - 11 January 2019

Jan 11, 2019 / News

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Sector: Financial & Insurance

Lighthouse Group (LGT) : Corp

Stability amidst testing markets

Key data                              

  • Share price (p)                  24.9
  • Target price (p)                40.0
  • Market cap (£m)                              31.8
  • Enterprise value (£m)                    22.2

A trading update that signals in-line EBITDA and PBT for the year ended December 2018. Lighthouse continues to deliver stability while building the opportunity to benefit from strong underlying industry drivers as it develops the advice business and generates further cash. Price target 40p, 61% upside.

Nik Lysiuk |


Sector: Technology & Telecoms

Sopheon (SPE) : Corp

Positive trading update

Key data                              

  • Share price (p)                  1 335.0
  • Target price (p)                U/R
  • Market cap (£m)                              135.3
  • Enterprise value (£m)                    123.1

For the third consecutive year, Sopheon has delivered a strong finish in the second half, which has built upon significant revenue visibility gained throughout 2018 – leading to revenue performance comfortably in line with expectations, with consequently strong EBITDA outperformance given the operational gearing inherent in the software licence based model. So soon after 31 December year end, no figures are disclosed in the update and we look forward to the scheduled end-January trading update – which we expect will be continuing the positive newsflow alongside this week’s announcement of the partnership with Hershey, reiterating the quality of the solution and customer base. For the time being, we acknowledge a review is merited, subject to sufficient detail, and having exceeded 1,295p we suspend our target price pending the influence of clarity on growth, margins, and cash generation.

Andrew Darley |


Sector: Technology & Telecoms

Altitude Group (ALT) : Corp

Taking AIM

Key data                              

  • Share price (p)                  75.0
  • Target price (p)                U/R
  • Market cap (£m)                              49.4
  • Enterprise value (£m)                    48.1

Altitude has initiated an accelerated bookbuild to acquire AI Mastermind (AIM), channel partner for Altitude’s white label ChannlPro solution (AIMPro), and largest promotional product distributor member group in the US. The acquisition is to be funded by a £7.0m fund raising at 68p (assumed), including £3.2m for working capital purposes. Customers of AIM members spend an estimated $1.7bn per year in a US market worth $23bn, with only c.11% of transactions online – AIMPro creates an end-to-end solution for distributors to online sales, in addition to order flow management and a CRM, with Altitude benefiting from a percentage share of gross transaction revenue (GTR), from suppliers. The acquisition will improve gross margin from AIMPro, offer the opportunity for enhanced tiered AIM member fees, and allow Altitude to drive AIM expansion directly, to the benefit of the group. Target price under review pending conclusion of the ABB (formerly 105p).

Andrew Darley |


Sector: Support Services

NAHL (NAH) : Corp

Difficult Q4

Key data                              

  • Share price (p)                  111.0
  • Target price (p)                180.0
  • Market cap (£m)                              50.6
  • Enterprise value (£m)                    66.0

NAHL has highlighted a more difficult end to FY 2018 than expected. Residential Property has continued to be affected by the state of the housing market. Personal Injury has seen higher competition and it has been more challenging to generate enquiries at the required cost. Both issues are being addressed and, most importantly, the build of the wholly owned ABS is on track. Net debt will be lower than we forecast but we downgrade FY 2018E EPS by 8% and FY 2019E by 13%. Management has confirmed dividend cover will be maintained at 2x. We maintain our view that management is transitioning the business to a model that will generate very significant value post the regulatory changes and our target price remains focused on this prospect. Indeed, the current valuation has significant support from the value of the Critical Care division, which continues to trade well.

Guy Hewett |


Sector: Life Sciences

ANGLE (AGL) : Corp

Parsortix used in breakthrough CTC cluster research

Key data                              

  • Share price (p)                  74.0
  • Target price (p)                110.0
  • Market cap (£m)                              106.2
  • Enterprise value (£m)                    98.5

ANGLE’s Parsortix ‘state-of-the-art technology platform’ was cited in a peer-reviewed paper in Cell, which achieved an 80x reduction in cancer metastasis in mouse models by dissociating Circulating Tumour Cell (CTC) clusters. The research group in Basel is planning to undertake a breast cancer clinical trial in 2019 using Parsortix as a companion diagnostic to identify which patients should receive the repurposed FDA cleared drugs they have discovered. The research was only possible because of the Parsortix system’s unique capabilities to harvest CTC clusters. If proved out in human studies, this has the potential for Parsortix to be used repeatedly for all patients as a companion diagnostic. Despite the significant market potential, we make no changes to our forecasts and reiterate our 110p target price.

Mark Brewer |

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