finnCap Research Company Notes - 25 November 2019

Nov 25, 2019 / News

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Sector: Life Sciences

Cambridge Cognition (COG) : Corp

eCOA contract worth $225,000

Key data                              

  • Share price (p)                  27.0
  • Target price (p)                90.0
  • Market cap (£m)                              6.5
  • Enterprise value (£m)                    4.4

Evidence of further traction from its electronic clinical outcomes assessment (eCOA) platform should provide investors with some comfort that the company is on track to deliver on revised forecasts. The company also announced the launch of an improved eCOA platform as well as a $225k contract with a new client from the world’s top 10 pharmaceutical companies. We make no change to forecasts and reiterate our target price of 90p.

Mark Brewer

020 7220 0556

mbrewer@finncap.com

 

Sector: Technology & Telecoms

D4T4 Solutions (D4T4) : Corp

H1 as expected but with growing SaaS prospects

Key data                              

  • Share price (p)                  215.0
  • Target price (p)                310.0
  • Market cap (£m)                              84.3
  • Enterprise value (£m)                    73.1

As noted in the trading update, H1 was in line with expectations. It highlighted that this year will be particularly H2-weighted, with £8.8m sales in H1 delivering a small Adj. PBT. The expectation of a record H2 is underpinned by substantial annual contract renewals from licences signed in H2 LY; strong visibility on new contracts due to initiate in H2; and a significant pipeline of new business in negotiation with existing clients who continue to derive substantial benefits from D4t4’s data management solutions. We reiterate our FY forecasts and TP.

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

Sector: Support Services

Gateley (GTLY) : Corp

Double-digit sales growth in H1

Key data                              

  • Share price (p)                  164.0
  • Target price (p)                210.0
  • Market cap (£m)                              180.7
  • Enterprise value (£m)                    184.0

Gateley has confirmed a strong trading performance in H1 with sales up not less than 10% to £51.0m (to October). This, primarily organic, growth is built upon a broadening and deepening of the Group’s service lines and a 10% increase in fee earners since the year end. The Board looks forward to H2 with confidence and we make no changes to our forecasts. We reiterate our view that Gateley’s proven model continues to have good growth prospects supported by the addition of high quality staff and acquisitions helping to broaden out the range of services offered.

Guy Hewett

020 7220 0549

ghewett@finncap.com

 

Sector: Life Sciences

Omega Diagnostics (ODX) : Corp

Grass allergy test – first of screening assays

Key data                              

  • Share price (p)                  9.8
  • Target price (p)                25.0
  • Market cap (£m)                              14.7
  • Enterprise value (£m)                    15.6

Omega Diagnostics announced that it has CE-Marked its first allergy screening assay to be run on Immunodiagnostics Systems Holdings’ (IDS)-iSYS automated instrument. In response to customer feedback, this test represents the first of five multi-allergy mixes, in this case containing a mix of five single grass allergens. This provides further evidence of Omega’s drive to offer a competitive number (c.80+) of tests for IDS iSYS platform. We are making no changes to forecasts and reiterate our target price of 25p.

Mark Brewer

020 7220 0556

mbrewer@finncap.com

 

Sector: Technology & Telecoms

Wameja (WJA) : Corp

Strong Q3 momentum on the HomeSend network

Key data                              

  • Share price (p)                  6.0
  • Target price (p)                20.0
  • Market cap (£m)                              72.6
  • Enterprise value (£m)                    63.2

Q3 2019 has seen further positive progress on both the volume and the network elements of the HomeSend business. With the number of customers revealed to be in integration, we would certainly expect to see H1 2020 show a significant step-change in volumes over the platform. This provides us with some real insight on the appetite for the service in the market and how well Mastercard and HomeSend have been able to convert those through contracts and integration. We emphasise that the customer journey will likely be for multiple years and this progress report would suggest that HomeSend is ticking the boxes on both sales and now execution. We see revenue line increase as inevitable based on these numbers as the account-to-account market with higher ATV flow across the rails of the business.

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

Sector: Financial & Insurance

City of London Group (CIN) : Corp

Harvest time

Key data                              

  • Share price (p)                  137.5
  • Target price (p)                300.0
  • Market cap (£m)                              20.7
  • Enterprise value (£m)                    -29.7

There is at present a significant opportunity to gain a share of the UK SME banking market as the ‘Big Four’, which have historically dominated this market, increasingly struggle to meet SMEs’ service demands and generate sufficient profitability from their SME operations. City of London Group (COLG) has spent time, money and effort over recent years to set up a focused, licensed UK SME bank, Recognise, to target the UK SME market. Key regulatory and operational hurdles have now been cleared, the application has been sent and Recognise looks set to start operations in 2020. All indications point to a high return on the capital in the bank, supporting future capital raises. We initiated coverage of COLG with a 300p target price on Friday 22 November, and the rest of this report makes sense in that context.

Kim Bergoe

020 7220 0550

kbergoe@finncap.com 

 

Sector: Technology & Telecoms

Intercede (IGP) : Corp

Costs, tick, now for revenue

Key data                              

  • Share price (p)                  33.5
  • Target price (p)                80.0
  • Market cap (£m)                              16.9
  • Enterprise value (£m)                    16.5

Interims are in line with the October trading update and unchanged forecasts, with revenue growth +5% to £4.4m, and £5.2m gross cash. The reduction in opex continues to improve profitability, delivering a 1H operating profit for the first time since September 2013, even as contract wins continue from new and existing customers and the customer profile reiterates the quality of the software. Eighteen months after the arrival of CEO Klaas van der Leest, the improved performance has clearly become a trend, and the group’s confidence is expressed in targeted investment to accommodate channel sales and co-ordinate centralised R&D to a clear road map. The horizon for Intercede brightened dramatically at prelims in June when the two-year recovery plan was delivered in a year – now the sun appears to be coming up. 80p target reiterated.

Andrew Darley

020 7220 0547

adarley@finncap.com

 

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