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Frontier Smart Technologies: 100%+ gain and 200p target hit earlier than expected – what next?

By Cynical Bear | Thursday 11 January 2018

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.

My buy tip from last May, Frontier Smart Technologies (FST), has reached my target price of 200p earlier than anticipated having had a strong start to the year from a share price perspective, so I thought I should update on my current thoughts.

The short answer is I would be happy to hold for now. I tipped this at a 90p mid-price and up to 100p back in May, expecting that 200p would be reached in the back half of this year but momentum has really got behind the share price in recent months supported by a number of press releases relating to commercial partnerships this month.

Nothing has been RNS’d however so I am very keen to see the trading update which I anticipate will come out later this month. At a market value of over £80 million now, clearly some strong performance is now factored in to the share price and there is some risk of a drop on news; however, I would have thought that as long as there is a positive outlook statement in the trading update and a reasonably robust Christmas period, the share price will continue to tick along ok.

Clearly, if one got in back in May and is now looking at a gain in excess of 100%, one might consider top-slicing from a portfolio risk management point of view, but that comes down to one’s individual portfolios and the percentage weighting of this stock.

I continue to believe the space this is in is a good one at a macro level so have no particular reason to worry about the stock, but will reassess once I see the trading update. My general view in life is that it is extremely difficult to find good businesses with decent management teams and strong growth prospects so I am always willing to give them the benefit of the doubt and let the positions ride until I get some news to make me reconsider.

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