Kromek Group PLC (AIM:KMK)'s comment that revenues are expected to grow in line with market expectations of 20% this year implies a sharp pick-up in the second half to around 32%, says Cavendish.
Although this sounds like a tough target, the broker adds because of the recurring contract revenue nature of the business, revenue forecasts are predictable.
Due to that, management has good visibility on 84% of the 2024 forecast, with the remaining 16% coming from the known pipeline of opportunities.
Underlying profits [Adjusted EBITDA] also saw a dramatic improvement over the first half, a function of the improving gross margin and significant control of other operating costs, which reduced from £8.0m to £6.4m.
Cavendish has upped its forecast for this year from £0.9m to £1.2m, and more materially in 2025E, from £1.7m to £3.1m
Having also reviewed the longer-term opportunities for CZT in the Advanced Imaging market, the price target rises to 28p from 25p.