Detection technology specialist Kromek Group PLC (AIM:KMK, FRA:4KM) is ‘materially undervalued', according to a City broker Cenkos Securities, whose comments followed the take-out of the group’s only independent competitor.
Redlen Technologies was snapped up by photocopier and camera maker Canon Inc in a deal that values the former at US$270mln. Like Kromek, Redlen specialises in cadmium zinc telluride (CZT) detectors.
“Kromek’s medical imaging division competes against Redlen in the medical imaging market and this consolidation leaves Kromek as the sole independent producer of CZT detectors worldwide,” said Cenkos in a recent note to clients.
“The read-across valuation for this division alone suggests Kromek is materially undervalued, and we see fair value in excess of 50p.”
Kromek’s shares ended Monday at just 15.1p, meaning they would have to more than triple in value to hit the broker’s assessment of ‘fair value’.