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Valuations of #NCYT based on historic P/E ratios (thread)
On 13/07 when H1 2020 trading update was 1st given the share price was £2.70. When the full results were given on 17/09 the price was £3.80
Profit/share in the results was £0.5 giving P/E ratios of
13/07 =5.4
17/09 =7.6
On 13/07 when H1 2020 trading update was 1st given the share price was £2.70. When the full results were given on 17/09 the price was £3.80
Profit/share in the results was £0.5 giving P/E ratios of
13/07 =5.4
17/09 =7.6
Other analysts have estimated revenue of ~£300m for the full year. The profit/rev ratio in H1 was 55% so assuming this stays constant the EPS would be ~£2.34
So if the same PE ratio is kept, the expected share prices would be:
13/07 equiv = £12.6
17/09 equiv = £17.8
So if the same PE ratio is kept, the expected share prices would be:
13/07 equiv = £12.6
17/09 equiv = £17.8
This is IMO a poor judge of valuation, as the companies figures were skewed by a £7m debt pay off, and in H2 the acquisition of IT-IS Int. LTD will also skew from 'normal business'. Not to mention the companies P/E ratio seems to be assuming the firm will have no further revenue
Lets look instead at the EV/EBITDA ratio.
EV = MCap + debt - cash
Debt is 0. Cash was £17m.
MCap 13/07 = £190m so EV £173m
MCap 17/09 = £268m so EV £251m
EBITDA = £45m
Ratios
13/07 = 3.8
17/09 = 5.5
The S&P500 avg for Healthcare sector is 15.5!!
EV = MCap + debt - cash
Debt is 0. Cash was £17m.
MCap 13/07 = £190m so EV £173m
MCap 17/09 = £268m so EV £251m
EBITDA = £45m
Ratios
13/07 = 3.8
17/09 = 5.5
The S&P500 avg for Healthcare sector is 15.5!!
Obviously a discount needs applying as the post covid future is uncertain, so lets assume instead of 15.5 we target a ratio of 10.
EBITDA/rev ratio H1 was 68%. So at £300m, the EBITDA will be £204m.
For a ratio of 10 the EV would be £2b, but to get to MCap we need to add cash
EBITDA/rev ratio H1 was 68%. So at £300m, the EBITDA will be £204m.
For a ratio of 10 the EV would be £2b, but to get to MCap we need to add cash
Cash in H1 was 26% of revenue. So at £300m we can expect cash of £78m.
So MCap expectations IMO should be ~2.1b which brings me to my personal target of
*Drumroll*
£30/share
So MCap expectations IMO should be ~2.1b which brings me to my personal target of
*Drumroll*
£30/share
