One to Watch: Gala day for investors

Prostrakan110p -0.5pScotsman says BUY

PROSTRAKAN is a speciality pharmaceutical company based in Galashiels. Founded in 1995 the shares were listed in 2005 and from the share price performance you would think that not much has happened at the company since then. I would disagree.

The shares peaked last September at 155p and then fell back to 82p in December before rallying once again. Investors were concerned by disappointing news about sales of Sancuso, its treatment for chemotherapy induced nausea. Sancuso is one of Prostrakan's key drugs; the other, Abstral, relates to pain relief for cancer sufferers and here the news has been much more positive. There has also been a regulatory delay in obtaining approval in the US for a testosterone gel. Finally, a major shareholder has been reducing its stake and so there was limited demand for the shares.

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In early January a trading update confirmed the board continues to anticipate strong revenue growth in 2010 and that Prostrakan will operate profitably for the full year. This has helped the share price to recover part of the lost ground.

Investors have typically found it difficult to value the shares of a company as it moves into profitability. In this case investors appear to have significant doubts that the, albeit experienced, management team will be able to successfully address the issues that will no doubt arise as it expands from its UK base into Europe and the US and fail to deliver on a series of product launches. I consider these fears have been over stated and that there is considerable potential for shares to increase over the long term.

• The value of your investments may fall and you may get back less than you invested. This does not constitute investment advice and you should take professional advice regarding the suitability of this company for your portfolio.

May Gurney

230p -1.50p

Broker says BUY

MAY Gurney has announced two new long-term framework contracts with Wessex Water worth a potential 65 million over five years.

This is the second major water-related contract announcement in as many months, and Charles Stanley believes there may be more to come.

Kofax

201.75p +9.75p

Broker says BUY

CANACCORD Adams is raising its price target to 240p (previously 200p). It believes its year-end revenue forecasts are cautious due to a stellar performance from the software business and exceptional progress in the core software asset. The broker is impressed with the margin hike from 6.5 to 10.6 per cent.