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Horizon sees strong growth in products business

Revenue and underlying earnings are expected to be ahead of consensus forecasts
Horizon sees strong growth in products business
The company supplies research tools to organisations engaged in genomics and the development of personalised medicines

Demand for life science group Horizon Discovery's (LON:HZD) products is strong and it expects to report 120% growth in revenue in this side of the business for the year to end December.

The Cambridge-based group expects a second consecutive year of on-target performance since its IPO, with total revenues expected to be at least 2% ahead of £19.8 million market consensus, it added in the trading update.

The company supplies research tools to organisations engaged in genomics and the development of personalised medicines and product growth was driven by demand for genetically-defined cell lines and derived molecular diagnostic reagents.

Notably, the year saw it expand its existing catalogue of products from 2,750 at the end of 2014 to more than 23,000 genetically-defined cell line and in vivo models, and molecular diagnostic reagents at the end of 2015.

Dr Darrin Disley, chief executive, told investors: "2015 has been another strong year for Horizon, with growth underpinned by organic and inorganic revenue, new product launches, and the establishment of new channels to market.

"Horizon's reputation as a leader in gene-editing, translational genomics and personalised medicine is exemplified by the range of partnerships we have announced in the areas of product development (e.g. Axol Bioscience, CareDx, Definigen), market access (e.g. ThermoFisher, Abcam), and leveraged research (e.g. Servier, Redx)."

The firm also expects the full year underlying loss to be a positive improvement to the £7.7mln market consensus as it continues to invest in the business.

Cash at year end is expected to be £25.1mln compared to £18.5 million at the end of 2014.

Analysts were positive with broker Panmure saying the firm was "tracking well", with the business positioned solidly in terms of operational momentum.

"We consider today’s news strongly reaffirms our view that investors should take advantage of the current share price to Buy," it said.

The broker has a target price of 270p - more than double the current price of 131p.

N+1 Singer said trading performance was in line with its estimates and slightly ahead of consensus, driven as expected by a strong performance of the products business.

Dr Jens Lindqvist noted Horizon was also currently eligible for up to £208mln of milestones from its leveraged R&D business but noted it believed the products division will remain the company’s key growth driver for the next few years.

It repeated a 'buy' stance and 194p target price.

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January 19 2016

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