With its management expectations that 2024 will be a year of significant momentum in terms of both EBITDA margins and cash generation, it will be very interesting to see how this global integrated medical diagnostics business has fared in the first half of this year.
Based in Cardiff, with sites in five other countries, EKF Diagnostics Holdings (LON:EKF), will be issuing a H1 Trading Update within days.
Will it be good enough to get some excitement back into its share price?
The Business
Specialising in the development, production, and distribution of innovative medical technologies and patient-centric solutions EKF is a leading global diagnostics and biotechnology company.
Its solutions help to empower healthcare and medical providers to make informed clinical decisions through point-of-care testing and life sciences applications.
The company’s product portfolio includes small blood analysers and associated consumables used in testing patients for conditions including diabetes and anaemia.
EKF sells through a network of some 200 distributors covering every country around the world; while its German and American offices also sell directly into hospital laboratories, GP surgeries, universities and sports organisations.
The group has sold over 90,000 analysers all around the world since 2008.
This installed based forms the cornerstone of the EKF Point of Care business, requiring more than 60m tests to be manufactured every year to service existing demand.
New Launch And Contract Wins
Possibly the start of good news to come is this morning’s announcement of the launch of its new and enhanced Biosen C-Line, an industry leading benchtop glucose and lactate analyser within its Point of Care range, in response to customer demands for greater connectivity options and improved usability.
It also announced that it has secured new contract wins from two tenders: Hong Kong Red Cross (three years) and Thai Red Cross (two years) worth approximately £600k in total.
The Equity
There are some 455m shares in issue, with Harwood Capital being the biggest holder (29.09%), followed by Liontrust (11.99%), Gresham House Asset Management (8.87%) and others accounting for over 70% professional holders.
Analyst Views
Dr Julie Simmonds and Dr Mike Mitchell at Panmure Liberum rate the shares as a Buy, looking for 37p as their aim.
They estimate current year, to end December, sales of £54.2m (£52.6m) with adjusted pre-tax profits of £8.2m (£6.5m).
For 2025 they see £57.9m and £10.1m, then in 2026 £63.8m and £12.7m respectively.
Singer Capital Markets also have the shares as a Buy with 36p as their Price Objective.
Its analysts have very similar sales and profits projections, while looking for the group’s shares to be re-rated in due course on the back of higher numbers.
My View
Capitalised at almost £139m this group has the historic basis of growth driven by expanding sales of its consumables, especially as it develops more specific products into the ‘point of care’ marketplace.
Until much better estimates prevail, I would not be in a rush to chase this stock, now 31p, but instead, perhaps, wait to to buy on any dips.