ANGLE (AGL) : Corp

De Novo submission to FDA expected by end Q1 2020

Key data

  • Share price (p) 63.2
  • Target price (p) 135.0
  • Market cap (£m) 109.2
  • Enterprise value (£m) 81.3

ANGLE confirmed that following a formal face-to-face meeting with the FDA last week it expects to file a De Novo submission with the FDA for Parsortix by the end of Q1 CY 2020. The meeting resulted in a request from the FDA for some minor additional analytical study work, which will be run in parallel with the draft of the final De Novo submission and should not affect the filing timeline. It fully justifies the decision taken by management to go down the Q-submission route, as it enables ANGLE to address additional FDA questions earlier, thereby reducing the risk of regulatory slippage later. This meeting has significantly de-risked the regulatory path, paving the way for the prospect of FDA clearance in Q3 CY 2020 and a watershed moment for the company as we expect clearance to catalyse additional commercialisation and partnership deals.

Mark Brewer 020 7220 0556 mbrewer@finncap.com

Netcall (NET) : Corp

Trading update – strong cloud ACV growth

Key data

  • Share price (p) 38.5
  • Target price (p) 90.0
  • Market cap (£m) 55.3
  • Enterprise value (£m) 55.5

Netcall’s interims trading update reveals performance the group has delivered EBITDA of £2.1m from revenue of £12.3m, representing 51% and 48% of unchanged full-year expectations, respectively. Total ACV growth of 9% to £16.6m (1H19: £15.1m, FY19: £15.7m) included cloud ACV growth of 22% to £6.7m (1H19: £5.5m); part of which was Low code ACV, up 21% to £5.1m (£4.2m). Combined with revenue growth from product sales and professional services, performance forms a solid base for delivering full-year performance and driving the growth into FY20 and FY21. Gross cash of £6.5m (after payment of £1.7m deferred contingent consideration of £1.7m to the former owners of MatsSoft) leaves net debt of £0.2m at close to breakeven, as expected. We reiterate our 90p target price and look forward to more detail at interims in late February.

Andrew Darley 020 7220 0547 adarley@finncap.com

Pelatro (PTRO) : Corp

FY 2019 delivered and FY 2020 looks bright

Key data

  • Share price (p) 62.0
  • Target price (p) 125.0
  • Market cap (£m) 20.2
  • Enterprise value (£m) 19.8

The YE trading update reassures that FY 2019 revenue and adj. EBITDA will be in line with the early December guidance. At that time, we revised expectations as management pivoted away from large but unpredictable one-off licences, towards the security of long-term recurring revenue/gain-share contracts through H2 2019. This also improves cashflow with regular payments replacing the long wait for large, staged cash payments on completion and acceptance. Thus cash collection improved in H2 and the YE net cash of $0.5m is comfortable and as we expected. YE trade debt of $5.5m is also in line with our forecast (of $5.3m). Looking ahead, that pivot to recurring revenue sees PTRO start the year with $4m of the $8m revenue forecast already secured (actually a run-rate of $5m pa as only half of that major contract’s $2m annual revenue is due this initial year). This is a very strong position as it starts FY 2020 with repeating revenue covering its P&L cash costs and with a record deal pipeline grown to $16m (from $15m just over a month ago) – $6m of that likely from existing customers. FY 2020 has a head start and we expect a record year in sales and earnings.

Lorne Daniel 020 7220 0545 ldaniel@finncap.com

Ideagen (IDEA) : Corp

Interims highlight ARR growth

Key data

  • Share price (p) 187.0
  • Target price (p) 200.0
  • Market cap (£m) 423.1
  • Enterprise value (£m) 441.1

Interims demonstrate group revenue growth of 30% (including 7% organic) from increasing revenue quality as recurring revenue hits 74%. With an increase in ARR of 20% over only 6 months (+10% organic and +10% acquired), SaaS revenues have grown 76% year-on-year, from a 48% increase in SaaS bookings. The strategic execution remains impeccable, with two acquisitions in the period, integrated through Ideagen’s internal 72-point plan, leading to both revenue growth and margin expansion, from cross sales and synergies. Net debt of £18.0m represents less than 1x forecast FY20 EBITDA, with an expectation of net cash by FY21 and clear balance sheet capacity for further acquisitions ahead of the current income statement. Forecasts are unchanged and, with the General Election expected to release a log jam of decision making by acquisition targets, as well as providing a flurry of additional red tape as a post Brexit UK invents its own regulation standards in addition to target trading markets, we lift our target price to 200p in anticipation of acquisitions.

Andrew Darley 020 7220 0547 adarley@finncap.com

Somero Enterprises (SOM) : Corp

Q4 ahead of expectations, boosting cash and dividend

Key data

  • Share price (p) 260.0
  • Target price (p) 380.0
  • Market cap (£m) 146.3
  • Enterprise value (£m) 134.7

The FY update highlights a stronger Q4 than expected, with a rebound in US sales after a weak H1 and initial SkyScreed sales. This results in an uplift in revenue, profit, and cash guidance for the year, thereby also boosting the underlying and supplemental dividend. This results in an eye-catching current year yield of 7.3% and undemanding P/E of 9.4x. We maintain our 380p price target, which offers good upside potential.

David Buxton 020 7220 0542 dbuxton@finncap.com

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