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  • Writer's pictureMark Watson-Mitchell

Futura, Strix, Windward and Team Internet

Futura Medical (LON:FUM) – quickly looking to impact


Based in the Surrey Technology Centre in Guildford, this £115m capitalised company is due to declare its results on Wednesday 10th April.


Its business is all about enhancing consumers’ quality of life to enable them to enjoy their lives to the full.


Futura Medical is developing a portfolio of innovative products for two large markets, sexual health and pain.


Its late-stage pipeline of products is based on the company’s proprietary, transdermal DermaSys® technology designed to offer rapid and targeted local delivery of clinically proven effective treatments via the skin. 


The company is the developer of innovative sexual health products, including lead product Eroxon, its clinically proven product that has been developed for the treatment of Erectile Dysfunction. 


The highly differentiated product, which is the only topical gel treatment for ED available over the counter and helps men to get an erection in ten minutes, addresses significant unmet needs in the ED market.


The group’s strategy is to develop its portfolio of innovative products for sexual health and then partner at the optimum time to generate significant long-term annual revenues and the most shareholder value.


Futura has distribution partners in place in a number of major consumer markets including Haleon in the US, the largest market for ED in the world, and Cooper Consumer Health in Europe.

Analyst Seb Jantet at Liberum Capital is a major fan of the group and has a Price Objective on its shares of 131p, which is almost three and a half times higher than last night’s closing price of just 38p.


He states that the early February Trading Update for its 2023 year, was a timely reminder of how much progress the company has made and how little credit it has been given for that progress.


The analyst considers that Futura is now a revenue-generating consumer health company, with a healthy balance sheet, with £7.7m cash, and should be breakeven in the current year and then start generating cash from next year onwards.


At that time Jantet noted that:


“The current share price implies that Futura will take less than 4% of the European ED market and none of the US market – those assumptions are completely at odds with progress to date, with Eroxon taking 20% of the UK and Belgium markets.”


At the time of the Trading Update the group’s CEO James Barder stated that:


"I am incredibly proud to report that we have delivered on the three key objectives that we set out in 2023: achieving regulatory approval in the US; progressing commercial discussions by securing a standout distribution partner in Haleon for the largest consumer healthcare market in the world and reporting our first meaningful revenues.


The delivery of this progress, alongside the fact that we have an award-winning product, has given us a robust and broad platform to build upon in the year ahead.


We are helping to address an issue that impacts 1 in 5 men globally across all adult age brackets, with approximately half of all men over 40 experiencing ED and 25% of all new diagnoses being in men under 40.


The availability of Eroxon as the first over-the-counter ED product without the need for a prescription or pharmacist intervention, as opposed to by prescription, significantly improves access for men or their partners without the normal cost or embarrassment issues often associated with consultation of a healthcare practitioner.


With the size of the target market and the progress we are making to reach it, we look forward to the year ahead and confident of considerable growth acceleration over the medium term - delivering progress in sales across multiple countries and broadening distribution by launching in new markets."


A week later Barder declared that Eroxon was to be available on prescription as well as over the counter in England and Wales.


Over the last two months the group’s shares have been up and down from a low level of 27p in early February, up to 45.55p two weeks later, before drifting back to the current 38p.


Without doubt Futura is a growing story, still in its very early stages of penetrating world markets and it will take some time to develop to its might.


Even so its shares are certainly a good example of hope of what is to come.


From the current 38p they could so easily rise towards the Price Objective set by Liberum Capital.


A firm hold.


(Profile 14.03.19 @ 15p setting no Target Price)

(Profile 22.12.21 @ 34.5p setting a Target Price of 50p*)


Strix Group (LON:KETL) – whistling for these shares to steam up


This group, which is the global leader in the design, manufacture and supply of kettle safety controls and other complementary water temperature management components, yesterday announced its 2023 results and they were much as expected.


Revenues were up 35.2% to £144.6m, adjusted pre-tax profits were off 1.1% at £21.9m, while earnings were down 15.7% at 9.2p per share.


The group has endured hassles on its Kettle Controls side, where the key regulated market suffered a decline in volume, however it is now recovering albeit at a slow rate.


The Regulated Market accounts for 60%, while the Less Regulated Market is 25% of Kettle Controls sales.


The key negative market drivers included the ongoing Cost of Living crisis in Regulated markets and softness in China’s post-COVID economy.


The major acquisition of 2022 was the Australian-based Billi business, supplying premium filtered and non-filtered instant boiling, chilled and sparkling water systems.


Billi has a successful history of growth, with a double-digit revenue compound annual growth rate over the past five years, at robust gross margins while being highly cash generative.


Combining the group’s technology synergies in water heating, thermal control and energy efficiency, will provide Billi with new product development opportunities, enabling further differentiation and IP protection.


While Kettle Controls are sold into some 110 countries across the globe, Billi is only strong in Australia and New Zealand and now in the UK, with the group intent upon pushing its sales into the US and a staged expansion into Europe.


CEO Mark Bartlett stated that:


"Strix is a resilient and highly cash-generative business with the opportunity to expand its addressable market across all divisions.


The recent strategic acquisition of Billi has delivered double-digit revenue and profit growth on a constant currency basis over the period which is anticipated to continue, helped by a staged expansion into key European markets.


The Group plans to return to its sustainable dividend pay-out ratio policy in 2025 reflecting the Board's confidence in the medium-term prospects."


Analyst Andy Hanson at Zeus Capital is looking for £153.9m sales this year, with profits of £24.2m and earnings of 9.4p per share.


Jumping into 2025 he sees £165.2m revenues, £26.3m profits and 10.3p earnings.


Overall, I note that while the group remains focussed on deleveraging, it continues prudent strategic investment into new products, technologies and manufacturing capabilities which will help to support an accelerated growth profile in the medium-term.


It was only three years ago that the group’s shares were trading at over 375p, as Covid took its grip globally.


On the basis of Zeus Capital’s estimates, now at just 65p they are looking extremely good value, especially taking a medium-term recovery view.


Set in early March, my recent Target Price of 82p gives me no worries, and even then they will still look cheap.


(Profile 31.12.19 @ 196p set a Target Price of 250p*)

(Profile 04.03.24 @ 67.60p set a Target Price of 82p)

 

And Finally ….

 

Team Internet Group (LON:TIG) – just days away


The end of this global internet group’s massive share buyback programme is nigh.


As I write the company only has 121,619 shares to buy in achieving its shareholder approved limit – which means that by the end of this week it will have been completed.


Mid-month the company strategically acquired Shinez I.O. – which is a leading online marketing business in a $41.8m deal.


The group will be holding its AGM on Thursday 18th April, which will then be followed by its Q1 results on Monday 13th May.


Yesterday the group’s shares closed off 1p at 143p.


(Profile 17.04.23 @ 123p set a Target Price of 150p)

(Profile 18.01.24 @ 124.60p set a Target Price of 156p)


Windward (LON:WNWD) – now heading to 200p


Following yesterday’s announcement of its 2023 Final Results, this leading Maritime AI company saw its shares close unchanged at 108p.


It was a record year for Windward, with significant double-digit revenue growth and a considerable acceleration in its path to profitability, through disciplined cost control.


For the year to end December last the Israel-based company reported that its annual contract value rose 35% to $35.4m, while its revenue was up 31% at $28.3m, helping to substantially reduce its EBITDA loss by 59% to just $5.0m, leaving the group with $17.3m cash at the year end.


This was a year in which Windward has become firmly established on the world stage, enabling efficiencies and supporting compliance across global trade, through its data and AI capabilities.


The year saw the number of customers leap from 132 to over 200, with a number of recent wins having already been reported in this column.


The recent strong trading leads to current year confidence with CEO Ami Daniel stating that:


"I am pleased to have driven another year of significant progress for Windward in line with our stated strategy, delivering record levels of ACV and revenue, including substantial growth in our commercial segment.


Global trade faces an array of evolving challenges across security, sanctions, and supply chains. In the face of these ongoing pressures, we have further cemented our position across the industry as a trusted partner to governments and businesses of all sizes to help them meet their ambitions.


Looking ahead, we are excited to scale the business further and meet the growing need for the digitisation of the maritime market. We are supported in these ambitions by our global and committed team of maritime experts, a strong cash position, enabling continued investment into our solutions and people, and high levels of recurring revenue."


Broker Canaccord Genuity raised its Price Objective on its shares to 137p, while declaring that the group could become a sustainably profitable business,


It sees the shares potentially rising to 200p in a two-year view.


My point of view on this stock is that it is a little cracker, offering massive upside as it steams its way into profitability.


Although still loss-making, the company’s shares at 108p have strong appeal.




(Profile 03.04.23 @ 37.5p set a Target Price of 47p*)

(Profile 13.12.23 @ 80p set a Target Price of 100p*)

 

(Asterisks * denote that Target Prices have been achieved since Profile publication)

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