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Alliance Pharma - bank gains & sell

By Tom Winnifrith & Steve Moore | Sunday 31 May 2015

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Alliance Pharma (APH) has updated investors that “trading in the first four months of 2015 has been satisfactory” and that“we look forward to the remainder of 2015 with confidence.”

This follows particularly sales of biggest brand, Hydromol, having continued to grow strongly (+14%), recent acquisition MacuShield in line with expectations (+12%) and “a strong pipeline of potential acquisition opportunities”. The company also “continue to expect supplies of ImmuCyst to be resumed in the second half of the year, though initial quantities are still uncertain”.

Overall revenue is noted to be 6% higher than the same period last year, with more than £20 million of undrawn bank facilities available. Finance Director Richard Wright steps down at the end of the month, with a process to recruit his replacement stated to be “progressing well”.

We previously commented on the back of results for 2014 that there looked good scope for earnings per share to rebound above 3.5p this year and that, together with the solid cash generation foundations, we remained content at the then 35p offer price to continue to rate the shares a buyon the Nifty Fifty, with a 45p+ target price.

The shares have since risen to a current 43p-44.5p – which also compares to a 31p offer price at which they were initially tipped. We continue to like the company’s solid cash generation credentials, but the valuation now in conjunction with our nervousness about the wider market sees us now content to bank gains here; sell.

When there is a wider market correction we will undubtedly look to buy back in at lower levels, but for now this is cash in the bank.

This article first appeared  on the Nifty Fifty website run by Tom Winnifrith, Steve Moore and Lucian Miers - sorry paying customers come first. To read Lucian's next shorting idea later TODAYand to catch the next value investment share tip from Tom & Steve out shortly click HERE

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