By Jenny Ruth
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Thursday 4th March 2010 |
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Medical supplies company Ebos' 37.6% rise to $11.7 million in first-half net profit was well ahead of his $9.6 million forecast, says Selwyn Blinkhorne, an analyst at Craigs Investment Partners.
The increase mostly reflected operating efficiencies and technology and both gross earnings before interest, tax, depreciation and amortisation (EBITDA) and EBIT margins rose about 50 basis points while interest costs were 29% lower with net debt falling from $67.9 million in the previous first half to $29 million.
"Our forecasts now reflect the higher margins being achieved and also a more modest seasonal trading skew towards the second half of the year," Blinkhorne says. He has raised his forecast earnings for the year ending June from $23.3 million to $24 million and his forecast for the year ending June 2011 from $25.1 million to $26 million.
He expects Ebos will continue to grow through acquisitions and has factored in "relatively modest acquisitions" of $10 million each in 2011 and 2013.
Blinkhorne has also raised his valuation and target price from $5.99 to $6.64 to reflect the expected higher earnings.
"The key risks to our target price relates to margins and revenues being subject to pressure from public health sector spending initiatives and constraints."
BROKER CALL: Craigs Investment Partners rate Ebos as buy (raised from hold).
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