finnCap Research Company Notes - 22 May 2018

May 22, 2018 / Research Notes

Daily research from finnCap's leading analyst team.

Sector: Technology and Telecoms

ClearStar (CLSU): FY 2018 is on track with new clients onboarding

Key data                              

  • Share price (p): 47.0
  • Target price (p): 60.0
  • Market cap (£m): 17.1
  • Enterprise value (£m): 16.2

The AGM heard that FY 2017 had seen another year of growth, driven by increased demand for the background and medical checking products and solutions, both direct and through the traditional channel partners. It also laid the foundations for accelerating that growth through enhanced sales and marketing efforts and integration with SAP’s SuccessFactors Recruiting solution, seen as a significant new route-to-market for direct services. Looking ahead, management feels FY 2018 is going to be a pivotal year for ClearStar as revenue growth delivers positive EBITDA, in line with our expectations, after several years of losses. We reiterate our forecasts and 60p TP, offering significant upside to investors.

Lorne Daniel | ldaniel@finncap.com

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Sector: Life Sciences

Avacta (AVCT): FIT for purpose

Key data                              

  • Share price (p): 29.5
  • Target price (p): 200.0
  • Market cap (£m): 20.4
  • Enterprise value (£m): 12.1

Proof-of-concept data showing that an animal can be effectively dosed with an Affimer by gene delivery are very encouraging and should be of significant interest to potential pharma partners. Clinically relevant doses of Affimer were sustained for over one month after a single intramuscular injection of DNA using FIT Biotech’s vector technology to encode for the Affimer. Moreover, Affimer expression levels were 3-12x higher than compared with serum levels of a monoclonal antibody, suggesting significant patient and commercial benefits if replicated in humans. Outside of its core focus, Avacta and FIT Biotech will look to collaboratively develop this platform with pharma. No change to forecasts or target price, but once again this illustrates the broadening utility of Affimers.

Mark Brewer | mbrewer@finncap.com

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