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FinnCap - Premaitha at 7p worth 12p

By Tom Winnifrith | Tuesday 15 May 2018

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. 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.

It is the house broker so not impartial. I think the target for Premaitha (NIPT) is too low and bought more shares this morning in the secondary market. But here is the Finncap take in a 20 page note:

"The FY 2018 illustrates the strong momentum in the business. The Non Invasive Pregnancy Testing (NIPT) business has started FY 2019 at EBITDA-breakeven with annualised revenues running at £7.7m (+24% up on FY 2018). This excludes growth from existing customers yet to come on stream, the benefit of national reimbursement coverage to NIPT volumes in France (expected H2 2018) and new customer wins in high-volume markets that will be accessible due to new technology that affords a lower-priced NIPT (eg. India).

The company also raised £2.5m by way of a placing at 4.5p, which is expected to be sufficient to get to cashflow-breakeven for the group as a whole. Although there remains the uncertainty of litigation with Illumina, the fact that Premaitha is in settlement discussions is positive, whilst growth initiatives are predominantly focused on territories where problematic IP is not in force (67% of revenues). We reinstate forecasts and a target price of 12p. "

You can read the full note HERE

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