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US propels Advanced Medical Solutions to new heights

The medical devices company has reported its 12th consecutive year of sales growth
March 14, 2017

Not for the first time, investors reacted badly to financial results from highly valued Advanced Medical Solutions (AMS). Once again, the medical devices group reported difficulties at its UK division, where a 5 per cent decline in sales of wound care product ActivHeal stunted revenue growth.

IC TIP: Buy at 236p

But those difficulties pale into insignificance when compared with the growth in the overseas business where products are sold via a network of distributors. True, reported sales received a slight currency boost, but even excluding foreign exchange movements, revenue rose 30 per cent here. This helped the group report its 12th consecutive year of revenue, profit and earnings increases.

The stand out region was the US, where sales from AMS's range of surgical adhesives, LiquiBand, rose 39 per cent at constant currencies. AMS wants to expand the LiquiBand product range stateside by gaining approval for its hernia fixation device, LiquiBand Fix8. This product reported a 69 per cent increase in sales in Europe to £1.1m.

Broker Numis has upgraded its forecasts for the year to December 2017 and now expects pre-tax profit of £22.8m, giving EPS of 8.8p (from £19.7m and 7.7p in FY2016).

ADVANCED MEDICAL SOLUTIONS

ORD PRICE:236pMARKET VALUE:£496m
TOUCH:236-237p12-MONTH HIGH:257pLOW: 177p
DIVIDEND YIELD:0.4%PE RATIO:32
NET ASSET VALUE:60p*NET CASH:£51.1m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201252.610.84.80.52
201359.513.15.50.60
201463.015.26.20.70
201568.617.06.80.80
201682.619.17.50.92
% change+20+12+10+15

Ex-div: 25 May

Payment: 16 Jun

*Includes intangible assets of £40.3m, or 19p a share