Sepura’s potential becoming clear, says SP Angel

Richard Smith: finance role at Sepura. Picture: Contributed
Richard Smith: finance role at Sepura. Picture: Contributed
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ANALYSTS at SP Angel Res­earch believe technology firm Sepura holds significant pot­ential.

The company designs private mobile radio (PMR) handsets and infrastructure for markets that require highly secure radio communications, including emergency services, security services and commercial customers in transport, oil & gas, mining and utilities.

SP Angel forecasts that sales in 2016 will rise by 60.6 per cent to ¤210.7 million (£150m) and 13.4 per cent to ¤239m in 2017.

The research note highlighted the US as a “geographic expansion opportunity” and the group has already been increasing its distribution and sales network there.

Although it describes Mot­orola Solutions as a “very strong incumbent competitor”, the note also points out that the market is very large and there is “always room for an alternative solution”.

“The group, in our view, is in a transitional phase, as it enters new product markets, has acquired new technologies and increases its territorial presence,” said a research note.

The company has also appointed a two heavyweight new directors. Richard Smith, currently chief financial officer of FTSE 250 listed semiconductor IP company Imagination Technologies Group, will be taking up the finance role. Russell King, who has board positions at FTSE 250 Spectris and Interserve, has been named as chairman.

Although SP Angel acknowledges the nature of the firm’s markets means there is some risk, it also sees “plenty of real opportunity”. “We continue to believe the shares merit a buy,” said the note. The target price has been increased by 10p to 180p, compared to last week’s close of around 159p.

» BROKERS at Charles Stanley have cut their rating on industrial conglomerate Melrose ­Industries. They now have a 12-month price range for the stock of 238-307p, down from a 281.4p target in March.

A research note said it still sees value in the business, but believes there are shares with better growth prospects elsewhere in the market.