Following the payment received by Kromek Group PLC (AIM:KMK) from Siemens Healthineers, broker Cavendish said this is expected to deliver profitability for the current financial year and materially strengthen the company’s balance sheet.
The company’s house broker reiterated its 26p target price, which compares to a last close at 7.1p, and its forecasts for the current year, which include a 24% rise in revenue to £24.1 million and a swing from a £3.2 million adjusted loss last year to a £4.9 million profit.
Earlier on Monday, the maker of CZT solid-state radiation detectors revealed that Siemens had made the first $25 million payment under the multi-year agreements signed at the end of last month.
This signalled that the AIM-listed company had satisfied the first milestone of the enablement agreement.
This was part of the multi-layered and multi-year agreements, which the broker said are “landmark” deals that it considers “provide strong external validation of Kromek’s platforms and technology”.
Cavendish noted that the funds are to be used to support the reduction of debt and the delivery of various milestones under the agreement, while the additional aggregate payments of $12.5 million are payable over the next four years.
Last month, the broker said it saw the potential for the production part of the agreements to “materially add” to revenues for the Advanced Imaging division throughout the agreement and said the overall agreements were a “step-change in both the breadth of agreements that it is capable of securing, and in terms of its future financial profile and revenue-generating capacity.”