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IndigoVision – AGM trading update sparks shares, still a speculative buy?

By Steve Moore | Thursday 18 May 2017

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.

In March I stated there looked enough to justify a speculative buy of shares in networked video security systems group IndigoVision (IND), with they then at just over 180p. The following updates with the shares currently soaring, above 200p, on the back of an AGM trading update announcement.

This reports “average camera prices have now stabilised”, though “pricing pressure on software” and impact of “lower priced software tiers launched in November”. However, additional volumes have seen “first 19 weeks of 2017, overall revenues were ahead of the corresponding period last year”.

It is then added that “the immediate outlook is more positive than it has been for some time, and the medium term prospects are promising. The board continues to expect that 2017 as a whole will see improvements over last year, with both sales and profits, as in recent years, second-half weighted, and the latter part of the year also benefitting from higher revenues in North America”.

In the latter, this is with “a recent restructuring of the US sales organization… under the leadership of experienced sales directors, two of whom have recently been recruited from leading competitors”.

The second-half weighting, together with the stated pricing pressure, means there continues to be some clear risk here, but I expect the next results to show that the balance sheet remains supportive. In conjunction with the currently considered “promising” outlook, I still consider there enough here to suggest, at around the 200p level, the shares remain a speculative buy.

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