finnCap Research Company Notes - 13 November 2019
Nov 13, 2019 / News
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Sector: Life Sciences
Avacta (AVCT) : Corp
LG Chem partnership expanded
Key data
- Share price (p) 17.7
- Target price (p) 76.0
- Market cap (£m) 31.1
- Enterprise value (£m) 24.6
Avacta announced that LG Chem has nominated the second and third drug targets of its multi-target development alliance that, potentially, is worth up to $310m. We make no change to forecasts, with FY 2020 revenues already factoring in c.$3m of near-term milestones. However, it provides further endorsement, if needed, about Avacta’s capabilities, namely speed of generating Affimer leads and validation of its therapeutic development platform. We reiterate our target price of 76p.
Mark Brewer
020 7220 0556
Sector: Industrial Technology
Hardide (HDD) : Corp
F-35 approval and patent granted
Key data
- Share price (p) 68.0
- Target price (p) 88.0
- Market cap (£m) 32.9
- Enterprise value (£m) 27.7
The company has announced it has been selected to be used to coat parts on the new F-35 Lighting II Joint Strike Fighter. This extends the group’s aerospace customer list, providing further evidence that Hardide-A coating is a replacement for hard chrome plating and HVOF thermal spray coatings. The announcement follows the recent granting of UK patent approval for Hardide coating of blades and vanes used in steam and gas turbines for power generation. Together they provide clear evidence of commercial traction and technology momentum and strengthen the investment case.
David Buxton
020 7220 0542
Sector: Technology & Telecoms
Ideagen (IDEA) : Corp
Strong interim trading update
Key data
- Share price (p) 151.0
- Target price (p) 180.0
- Market cap (£m) 337.6
- Enterprise value (£m) 355.8
The interim trading update to 31 October reveals strong growth in recurring revenue (+20% since y/e April), driven by the group’s successful strategy of acquisitions and organic growth. At period end, the acquisitions of Redland and Optima have delivered +£3.8m ARR, combined with +£3.7m organic ARR growth, an annualised equivalent organic growth rate of 20%. Organic reported revenue growth of 7% (in line with expectations) in the midst of licence/SaaS transition is a significant achievement, even as quality of earnings is also improved, compounding the benefit. Period end ARR of £43.9m is expected to have delivered interim reported recurring revenue of 74% (the FY20 target proportion, achieved early), with a view to rising to over 80% in FY21, an upgrade to the previous target of 75% by FY22. With net debt of £18.2m (and unchanged year-end expectation of £10.3m) therefore rapidly falling well below 1x EBITDA, the strategic opportunities for the group remain as strong as ever – the three certainties in life being death, taxes and compliance with regulation. Target 180p reiterated.
Andrew Darley
020 7220 0547