Kromek Group PLC's (AIM:KMK) interim results mark clear progress, but the market’s next focus will be on how growth looks once a major contract tailwind begins to ease.
The six months to October delivered a sharp upward adjustment, with revenue jumping to £15 million and the group returning to profit.
High-margin milestone income from the Siemens Healthineers enablement agreement was a key driver, lifting gross margins above 70% and pushing adjusted EBITDA to £6 million.
Analysts at Cavendish described the performance as “solid”, pointing to both the financial uplift from Siemens and a recovery in Kromek’s underlying businesses.
The broker kept its profit forecasts unchanged, suggesting the results broadly matched expectations rather than resetting them.
Cavendish reiterated its 'buy' recommendation and maintained a share price target of 26p, more than double the current level, arguing that the market still undervalues the longer-term opportunity.
It forecasts revenue of £27.1 million for the full year and expects Kromek to remain profitable, even as margins normalise once Siemens milestone income tapers through to 2027.
Cavendish remains upbeat on prospects for the business: "This is not only a story pivoting on the near-term revenue mix and beneficial financial impact of the Siemens Healthineers agreements but also about strategic execution across the underlying operations.
"We remind investors that while the impact of the Siemens Healthineers milestones taper through to FY27, we expect the building momentum across the wider business to translate to longer-term growth in profitability."
The shares, up initially, succumbed to a mild bout of profit-taking, falling 7% to 10.75p. That's hardly surprising given the 82% asent of the stock seen over the last six months.