Analysts at house broker finnCap have hailed Kromek Group PLC (AIM:KMK)’s “game-changing" seven-year contract with a top medical imaging manufacturer which will see the AIM-quoted group’s cadmium zinc telluride (CZT)-based detector technology be integrated into the client’s medical imaging scanners.
Although deal terms were not disclosed, “this agreement underpins our thesis and provides the strong external endorsement and validation that the market was seeking”, said finnCap.
Analysts said: “We consider the most likely use for CZT detectors to be in CT imaging applications, given market trends and the acquisition by Canon of Redlen Technologies in 2021 to secure in-house CZT production for its transition to CZT-based CT detectors.”
On this basis and assuming a 20% conversion of the client’s estimated share of the US$6.7bn CT scanner market to CZT detectors, annual revenues could be im excess of US$60m in 2030 with an underlying EBITDA US$15m), implying an initial supply contract worth between US$120 and US$150mln over this period.
finnCap reiterated a 27p price target against a publication price of 6.2p, suggesting an impressive 339% upside.