Analysts at Canaccord Genuity raised their target price on software and services firm Beeks Financial Cloud from 150.0p to 190.0p on Monday, stating full-year profits were on the horizon.
Canaccord said full-year sales at Beeks were £11.6m, slightly below consensus estimates of £12.1m, but noted that adjusted underlying earnings were £4.1m, was ahead of the £3.9m anticipated by analysts.
“Our forecasts were put in place over 12 months ago and therefore prior to the latest series of lockdowns in H2 FY21. Therefore, we believe that this is a very creditable performance,” said Canaccord.
The Canadian bank said looking ahead to the 2022 trading year and following Beeks’ July/August trading statement, it had opted to upgrade its sales estimates by 8% and adjusted underlying earnings forecasts by 4%.
“These new forecasts still assume immaterial Cloud Proximity revenue, even although the first contract for this (worth $1.0m) was received in September. We allow for margin compression in FY22E as depreciation, R&D amortisation and headcount costs should increase ahead of sales all to support the forecast organic sales growth now at over 40% in FY22E. We expect margins to increase in FY23E as investment slows relative to sales growth,” said Canaccord, which also reiterated its ‘buy’ rating on the stock.
Analysts at Berenberg reiterated their ‘buy’ rating on metals and mining outfit Base Resources on Monday following the group’s updated definitive feasibility study for its Toliara mineral sands project in Madagascar.
Berenberg said while the Toliara project remained on hold due to ongoing discussions about fiscal terms with the government of Madagascar, Base’s updated DFS pointed to “a larger project with stronger economics”, which should be “a major contributor to the Madagascan fiscus”.
The German bank pointed out that the reserve at the Ranobe deposit, on which the Toliara project is based, had been increased by 45% to 55 metric tonnes of heavy mineral, alongside a 68% increase in resources to 111 metric tonnes heavy mineral, inclusive, supported by the 2018/19 drill programme.
As a result of the increased tonnage, Base has recut the mine plan and now envisages a larger operation with a longer life, now approximately 38 years from prior estimates of 33 years.
However, Berenberg did note that the impact of delays and inflation, as well as a larger scope, had seen capex increase, now up 18% at $520.0m for stage one, plus a $124.0m working capital build, and a 99% hike in stage two, mainly due to the larger scale, to $137.0m.
“Clearly Toliara is an excellent project with plenty of upside in terms of mine life and potentially production if the lower sandy unit is brought further into resources and reserves, as well as offering upside from other revenue streams such as rare earth oxides,” said Berenberg.
“However, the key to progress remains an agreement on fiscal terms and until this is forthcoming, we expect the market to give limited credit to the project in Base’s valuation.”
Peel Hunt has upgraded its rating on Medica Group following a healthy set of interim numbers.
The London-listed teleradiology specialist reported a 56% jump in revenues for the six months to 30 June, to £26.4m, while pre-tax profits surged 69% to reach £2.2m, as volumes recovered post Covid. Acquisitions also contributed to the strong performance.
The gross profit margin improved to 51.1%, from 47.1% a year previously, due to mixed and higher-margin acquisition activity. Underlying earnings per share rose to 2.8p from 1.2p.
In response, Peel Hunt upped its rating to ‘reduce’ from ‘sell’, and said it would review its forecasts with management.
The broker continued: “We were very pleased to hear that AI is now being put front and centre at the recent capital markets day on 7 September. This included radiologists talking about how transformative the technology was in reducing errors and improving outcomes and safety.”
“While we may differ in terms of how Medica gets to ‘fit for future’ – we believe Medica should secure IP rather than partner – we were nonetheless encouraged. With the NHS reporting its biggest weekly fall in coronavirus bed occupancy for more than five months last week, we are less concerned for the immediate impact on business continuity.”
