IXICO's FY24 results: strategic repositioning and strong H2 recovery set stage for growth in 2025
IPR-rich, platform stocks can often generate outstanding long-term returns. This is because as the business scales, operating leverage kicks in, profits soar, and cashflows get reinvested in more organic growth - creating a positive flywheel effect.
To me as a shareholder, () is at the beginning of this virtuous feedback loop, as evidenced by today's strong 2nd half performance and expanding orderbook.
Here, H2 revenues leapt 27% sequentially to £3.3m (H1 £2.5m), whilst the orderbook closed Sept'24 at £15.3m, up 20% vs March (£12.7m). Gross margins too jumped from 40% in H1 to 51% in H2, highlighting its earnings potential.
Better still, I suspect over the next 3 years, demand is set to take off for its cutting-edge AI-powered medical imaging services used to develop new treatments for neuroscience diseases such as Huntington's, Parkinson's and Alzheimer's. Biopharma budgets are recovering, significant R&D is being ploughed into next generation drugs (eg Novartis, Bristol Myers and Roche) and 's super accurate imaging technology is improving efficacy, safety and patient monitoring whilst equally reducing cost and time-to-market.
Indeed, its AI algorithms, industry experts and digital biomarkers can detect and interpret >150 unique brain structures with microscopic precision. Plus, its highly contextualised database, incorporating a vast repository of 250k images, acts as a major competitive moat vs rivals.
What's more, given the H2 momentum and 75% FY'25 revenue cover, there might even be a chance of future upgrades as the year progresses. House broker Cavendish is forecasting Sept FY'25 sales and EBITDA to come in at £6.0m (£5.8m LY) and -£1.4m (£-1.7m) respectively, ending the period with £3m of net cash.
In contrast, on a pure run-rate basis - if one simplistically doubled the last 6 months - then FY'25 revenues and EBITDA would hypothetically be £6.6m and -£0.8m.
This means at 12p the stock trades on a modest 1.4x EV/sales, which looks far too cheap compared to sector peers and the 2023 takeovers of Instem (clinical trial software) and Medica (radiology services) on multiples of between 3.0x-3.5x EV/sales. Cavendish has a 24p/share price target.
CEO Bram Goorden commenting: "Going into FY25, I am confident we will continue to see renewed growth thanks to the completion and deployment of our advanced AI platform (TTNx), further market leading scientific innovation, an expanded global footprint & strengthened customer-facing teams."
In summary, momentum is building for this AI-powered 'picks and shovels' biotech play that is helping solve one of the world's biggest healthcare challenges, where tens of millions of people tragically die of neurological disease every year.
Lastly, at 4.30pm today, you can ask CEO Bram Goorden and CFO Grant Nash questions yourself on this live webinar. Register here.
Follow News & Updates from IXICO:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.