One to Watch: Cornering its market

Published on Wednesday 18 November 2009 19:33

Avacta 1.88p unch Scotsman says BUY

AVACTA is a UK-based company involved in the research, development and production of rapid response detection devices for clinical diagnostics markets, biopharmaceutical and homeland security and defence markets.

Avacta specialises in the biophysical characterisation of molecules, a niche market and one the group could corner. Avacta also has an established services business and is due to launch a flagship product, the Optim protein analyser, which is widely anticipated to significantly boost growth prospects. There is a need for testing at the early stages of drug development in an attempt to cut costs, of which the group is in a strong position to take advantage.

The company floated on Aim through the acquisition of Readybuy in 2006 and has raised a net 3.7 million to fund its activities. In January, the group acquired Curidium Medica, a personalised medicine firm, for about 6.2m. The latest acquisitions, YorkTest Veterinary Services and TheraGenetics, have also provided an entry route into different areas for the group. The recently-announced 2m share placing should let the group scale up manufacturing and accelerate the commercialisation of products.

Actava will be targeting other markets, namely industrial sensing, materials analysis and chemical/biological security. There are some possible risks worth considering; there could be a slow uptake of the flagship product and near-term single product risk as it will be heavily reliant on the success of its Optim Analyser. The research that has gone into the product should, however, present barriers to entry for would-be competitors.

&#149 The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

Bovis Homes

437.2p -11.3p

Broker says SELL

BOVIS Homes is more positive than its peers but is "expensive", according to KBC Peel Hunt.

The broker said: "Bovis has a superior cash position and talks of provision releases, but the problem is the rating. When valued on an EPS basis, the shares are trading on a PE of greater than 35x to end-2011."

Experian

589p unch

Broker says HOLD

SEYMOUR Pierce has upgraded Experian from "underperform" –a rating in place since July – to "hold" following the credit reference agency's interim results.

The broker raised its target price from 475p to 550p, adding: "The results are better than expected and we will revise our full-year forecasts upwards."