ANGLE (AGL) : Corp

Breakthrough research in brain metastasis in NSCLC

Key data

  • Share price (p) 64.0
  • Target price (p) 135.0
  • Market cap (£m) 110.5
  • Enterprise value (£m) 90.1

Highly positive independent research, from University Medical Centre Hamburg-Eppendorf, and published in the Journal of Neuro-Oncology, suggests that Parsortix may aid in the assessment of the likelihood of a patient suffering a brain metastasis in the future. Parsortix may also provide additional medical information that could otherwise only be obtained by a highly invasive tissue biopsy of the patient’s brain. This represents the 30th peer-reviewed independent research using Parsortix. The near-term focus remains the potential for FDA clearance of Parsortix in late 2020, which will be a watershed moment for further clinical applications to be developed. No changes to forecasts and we reiterate our target price of 135p.

Mark Brewer 020 7220 0556

Braemar (BMS) : Corp

Shipbroking had a strong H2 but outlook more cautious

Key data

  • Share price (p) 139.5
  • Target price (p) 224.0
  • Market cap (£m) 43.1
  • Enterprise value (£m) 74.0

Braemar Shipbroking had a strong H2, largely driven by stronger tanker markets in Q4 2019. Consequently, 2019 results are expected to be in line with market expectations. However, shipping markets have seen significant falls in charter rates since the start of 2020 due to reduced import volumes going into China. Until the spread of COVID-19 shows signs of slowing, forecasts for economic growth and global trade are widely expected to continue to fall. Management has commented it is too early to determine what the full impact will be on Braemar, but we have factored more caution into our forecasts and assumed 2020 profits are more in line with 2018 (before stronger tanker markets benefited Shipbroking in 2019 and 2020). Our new forecasts are shown below. We continue to believe the new management team will unlock long-term value, and highlight that closest peer Clarkson is valued at a very significant premium (2020 P/E 19.8x).

Guy Hewett 020 7220 0549

Destiny Pharma (DEST) : Corp

Phase IIb recruitment on track to complete mid-2020

Key data

  • Share price (p) 35.5
  • Target price (p) 250.0
  • Market cap (£m) 15.5
  • Enterprise value (£m) 6.4

Recruitment for XF-73, is due to complete in mid-2020, following slower than planned recruitment over the past three months. In response to a shortfall in eligible cardiac surgery procedures in one country, Destiny are opening further clinical sites and an additional European country. The Phase IIb trial is assessing XF-73 for the prevention of post-surgical infections caused by the hospital superbug Staphylococcus aureus (SA; a leading cause of surgical infection), including methicillin-resistant SA (MRSA). Full Phase IIb study data will be available after recruitment completes in mid-2020. With a cash runway through to H1 2021, we point to the risk-reward profile and reiterate our target price of 250p.

Mark Brewer 020 7220 0556

President Energy (PPC) : Corp

Gas infrastructure completion opens second growth front

Key data

  • Share price (p) 3.4
  • Target price (p) 8.0
  • Market cap (£m) 42.0
  • Enterprise value (£m) 58.5

President has completed its Rio Negro gas infrastructure upgrade, paving the way for a major increase in gas deliveries to market. Gas production through this pipeline network is expected to quickly ramp to 2,000 boepd, boosting overall production to 4,000 boepd. This volume increase will coincide with seasonal gas price increases in Argentina, and alongside a return to normal crude pricing helps underpin the doubling in EDITDA we expect this year. President has recovered from last year’s Argentine crisis and is set to emerge with a stronger balance sheet and more diverse production platform that provides a solid foundation for continued growth.

Jonathan Wright 020 7220 0543

4imprint (FOUR) : Corp

Strong 2019 with long-term potential undiminished

Key data

  • Share price (p) 2 720.0
  • Target price (p) 3 146.0
  • Market cap (£m) 762.7
  • Enterprise value (£m) 740.2

4imprint has reported a strong set of FY 2019 results driven by +17% sales growth and operating margins rising from 6.25% to 6.37%. Adj. EPS grew by +19% and the dividend has been raised by +20%. As per usual, this progress was backed by strong cash generation and net cash was $41.1m at December 2019. Approximately 60% of the blank stock 4imprint uses is from China, imported to its US suppliers who imprint it with a logo. As per normal, most of the blank stock needed for H1 has been delivered to the group’s US supply base and, there has therefore been no short-term impact from COVID-19. However, if disruption were to continue in China throughout H1 (or beyond) then disruption for 4imprint becomes progressively more likely. Hence, while under normal circumstances we would upgrade our forecasts following the strong performance in 2019, for now, we leave them unchanged until the supply chain impact is more certain. We regard the impact to the share price as an opportunity for investors to take advantage of the undiminished long-term opportunities for growth supported by the group’s excellent track record, cash generation and high ROCE.

Guy Hewett 020 7220 0549

Xeros (XSG) : Corp

Sale of non-core business

Key data

  • Share price (p) 0.7
  • Target price (p) 4.0
  • Market cap (£m) 5.5
  • Enterprise value (£m) 0.0

Xeros has announced the sale of its non-core Marken business (US specialist cleaning) for cash consideration of £265k. This sale completes Xeros’ transition to an asset-light, IP-rich, licensing operation. As such we are not changing our forecasts or target price, and await further commercial licencing developments.

Raymond Greaves 020 7220 0553

DX (DX) : Corp

Higher levels of service, productivity and efficiency

Key data

  • Share price (p) 11.3
  • Target price (p) 18.0
  • Market cap (£m) 64.5
  • Enterprise value (£m) 72.9

H1 2020 results evidence the benefits of the turnaround continue to come through. Ignoring IFRS 16, sales grew +8% and EBITDA has moved back into profit at £0.1m, up from a £2.5m loss in H1 2019. New commercial processes, improved customer service and productivity gains have benefited Freight, alongside a slowing in the attrition rate at Exchange and good growth in Courier and Secure. We have reduced profits by £0.3m due to some caution on the impact of COVID-19 and IFRS 16 reduces profit by £1.0m. We maintain our view that the free cash flow potential post turnaround will support a materially higher share price.

Guy Hewett 020 7220 0549

Gooch & Housego (GHH) : Corp

Streamlining manufacturing

Key data

  • Share price (p) 1 215.0
  • Target price (p) 1 150.0
  • Market cap (£m) 304.2
  • Enterprise value (£m) 318.5

The company has announced it will streamline its Precision Optic and Acousto Optic manufacturing activities in order to improve efficiencies as well as protect its market positions. We see this as a sensible move to improve its competitiveness and operating efficiency in a product area that has seen gradual pressure on its margins from Far East competition.

David Buxton 020 7220 0542

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