Cavendish has retained its buy rating and 26p price target on IXICO PLC (LSE:IXI, OTC:PHYOF, FRA:PYPB) following a first-half trading update that the broker described as demonstrating strong continued revenue growth, with the neuroscience imaging and analytics company trading in line with full-year expectations.
The company reported first-half revenues expected to reach £3.9 million, up 23% year on year, driven by new contract wins, extensions and increased biomarker analysis activity, the measurement of biological indicators used to track neurological disease progression in clinical trials.
Cavendish said the first-half performance leaves IXICO needing to deliver approximately £3.6 million of revenues in the second half to meet the broker's full-year forecast of £7.5 million, representing year-on-year growth of 7.5%, which it characterised as a prudently conservative target at this point in the fiscal year.
The order book is the standout metric for Cavendish, with IXICO expecting it to reach £18.1 million at the close of March, up 38% on the same point last year and the highest level reported since the close of the 2021 financial year.
The broker said the enlarged order book provides strong visibility on future revenue recognition and underpins its confidence in the company progressing toward sustainable profitability.
Gross margin improved to 53% from 50%, while the EBITDA loss narrowed to £0.5 million from £0.7 million, demonstrating operational leverage even as the company continues to invest for growth.
Cavendish highlighted IXICO's recently announced £10 million capital raise as a significant strategic development.
It reckons this will fund the company's Tech Bio strategy, which aims to expand the addressable market from an estimated $100 million within clinical trials to a $1 billion opportunity across the broader clinical healthcare market by partnering its IXI platform with contract research organisations and clinical trial management systems.
The broker noted IXICO's recently announced collaboration with Medidata as the first concrete step in executing that strategy.
At 7.25p, Cavendish's 26p target implies upside of 259%.