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Peel Hunt resumes coverage of Genedrive with a ‘buy’ rating and 60p price target after recent results

The Peel Hunt analysts noted stronger traction than expected with the US Department of Defence (DoD), with the group having received a second order of the DoD in January

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They also noted Genedrive management’s confidence that “further orders will be received from [the DoD] in the medium term”

Peel Hunt has resumed coverage of Genedrive PLC (LON:GDR) with a ‘buy’ rating and a price target of 60p per shares following the medical equipment group’s recent interim results, having put the stock ‘under review’ in December 2018.

The City broker said its resumption follows the AIM-listed group’s £6m gross capital raise in the fourth-quarter of 2018 - £3.5mln of equity and a £2.5mln convertible loan – and after it guided for slower than expected revenues from Hepatitis C virus (HCV) identification kit due to delays to in-country registrations.

READ: Genedrive optimistic about some near-term progress on its Genedrive HCV ID registrations

In a note to clients, the Peel Hunt analysts pointed out that the impact of the slower HCV assay revenues is, at least partially, offset by stronger traction than expected with the US Department of Defence (DoD), with the group having received a second order of the DoD in January.

The analysts said: “Though transparency on these orders is understandably low (so we struggle to forecast), we now adjust our top-line to meet the company’s ‘minimum guidance’ for FY19 (£2.5mln) which implies a c6-9 month delay on our HCV estimates prior to going under review (consistent with guidance that HCV is expected to contribute more significantly to FY20).”

They also noted Genedrive management’s confidence that “further orders will be received from [the DoD] in the medium term”.

Genedrive shares were steady at 23.50p in late afternoon trading on Friday.

Quick facts: Genedrive PLC

Price: 21.5 GBX

AIM:GDR
Market: AIM
Market Cap: £7.31 m
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