Four spectacular small-caps going places fast

Four very different small caps – Oxford BioMedica (OXB), Alpha Financial (AFM), Tricorn (TCN), and MS International (MSI) – repaid the faith of investors today with some spectacular share price gains.

Aside from their double-digit percentage rises, the quartet have some interesting stories to tell, not least the announcement by Oxford BioMedica concerning the development of its gene therapy treatment for Parkinson’s.

Its licensing agreement with Axovant Sciences, a clinical-stage biopharma company, will accelerate the development of OXB-102 in an effort to address a disease which has a high unmet medical need.

Oxford BioMedica will receive a total of $842.5 million dependent on development, regulatory and sales milestones, with 7% to 10% tiered royalties on net sales of AXO-Lenti-PD – as the therapy will now be known.

Peel Hunt immediately raised its price target to 1010p from 780p. Oxford Biomedica has been on the stockmarket since the mid 1990s, with shares hitting their all-time peak during the dotcom boom.

Source: interactive investor         Past performance is not a guide to future performance

In contrast, Alpha Financial Markets Consulting, which provides specialist consultancy services to the asset and wealth management industry, is celebrating its first set of results following its AIM admission in October.

Today’s figures show the continued benefit of “deep-rooted change” within the industry, with pressure on fees and regulatory focus driving the need for Alpha’s services on a range of complex change initiatives and projects.

Alpha’s adjusted earnings were up 62.9% to £13.9 million, ahead of market expectations.

Until recently, Alpha shares were stuck close to their 160p IPO price but that changed at the end of April, with the stock now trading above 200p after today’s 7% post-results improvement.

Berenberg has a price target of 250p and says it continues to believe there’s a “substantial opportunity” ahead for Alpha through geographic and project growth.

The broker’s “conservative” estimates are for annual revenues growth of 10% in the 2019-21 period, with margins of 21.1% having the potential to reach 23%-24% once earlier stage countries in its portfolio reach maturity.

Alpha trades on 16.9x a projected 2019 price earnings (PE) multiple. Berenberg added:

“Given the strong historical delivery and potential growth ahead, we think this is cheap.”

Today’s total dividend for the year of 5.17p per share was in line with the policy of paying approximately 50% of post-tax profits to shareholders.

Malvern-based Tricorn was also the beneficiary of favourable broker comment today after the maker of pipe and tubing assemblies for the energy and transportation sectors posted a 260% jump in annual profits.

Tricorn, which joined AIM in 2001, said it expected to make “further significant progress” in the current year.

Based on its expectations that Tricorn could eventually deliver annual profits of £2.5 million, broker Stockdale Securities kept its buy rating and upgraded its target price from 35p to 50p. Such a level would represent a record high for the stock, which has doubled in value in just over a year.

Source: interactive investor         Past performance is not a guide to future performance

While Tricorn has suffered share price fluctuations in the past, Stockdale analyst Robert Sanders points out the company now generates a substantial amount of revenues through agreements with long-term customers.

The 50p target is based on a PE of 9.1x. Given its strong cash generation record, Sanders thinks that Tricorn can cut net debt from £3 million to £700,000 by 2021, as well as resume dividend payments from 2019.

MS International has diverse businesses ranging from petrol station forecourt structures, through to the supply of weapon systems to the Royal Navy.

Its shares are now trading at their highest level in five years after today’s well-received annual results showed the business on an “upward trajectory”, with earnings per share more than doubling to 20.5p for the year to April.

This reflected a recovery in revenues for the defence division, helped by a buoyant export market, and the impact of a new US-based production facility on its forgings business.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.

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