With so much uncertainty currently engulfing the markets - not least possible invasion of Ukraine by Russia, rampant inflation & tightening Central Bank policy – it's no wonder equities are a little rattled.
However, one relative 'safe harbour' is Healthcare, which is enjoying numerous secular tailwinds (eg ageing demographics), huge scientific advances and strong pricing power.
Take Belluscura (BELL ) , a next generation medical devices firm specialising in portable & light weight oxygen concentrators (POC) - used to treat patients with severe respiratory conditions, such as COPD, pneumonia & even long COVID.
Today, the company reported ‘in-line’ prelims adding that “in the first 6 weeks of 2022, it had sold or received orders for more units than the whole of last year”. And importantly is on track to meet its volume & financial targets for the next 4 years of 4,000, 14,000, 25,000 and 50,000 respectively
Here house broker Dowgate Capital are forecasting BELL will be profit neutral in 2023, cashflow positive by 2024 and deliver 2025 normalised EPS of 23.7c on revenues of $111m.
Ok, so how much is the stock worth?
Well I would value the business on a 2025 15x-20x EV/EBIT multiple, which - discounting back at 12% and adjusting for $15.6m of net cash - generates a theoretical valuation of $320m-$420m, or 185p-245p per fully diluted share.
Plus, with the $3bn+ POC market expected to grow at >10% pa for the foreseeable future. Alongside many of BELL's larger rivals either selling technically inferior products &/or struggling with acute supply chain issues, then there’s an enormous runway ahead.
CEO Bob Rauker commenting: "We are delighted with progress... & continue to develop follow-on products which will be launched in 2022. The Company has a strong balance sheet and is well positioned to deliver substantial growth in 2022. We look forward to the future with confidence."