TPI provided its latest research note on DeepVerge plc (DVRG.L) & Microsaic Systems plc (MSYS.L).

News updates from both DeepVerge and Microsaic have been released this morning. While providing a trading update for its traditionally quiet first quarter, in which Q1 2022 produced record unaudited sales up 84% to £2.38m.

DeepVerge also confirmed one of its divisions had signed a Manufacturing Services Framework Agreement (‘MSFA’) with Microsaic with an initial contract worth £400,000, while also noting that it is presently seeing post-COVID market and sales activity intensify across all its international markets.

Significantly, the Group’s Chief Executive Officer, Gerard Brandon, went on to note that “Growth remains on track to achieve triple-digit percentage revenue growth year-on-year, similar to the last 3 and a half years”.

Recognising the scale and international nature of the opportunities now being presented to DeepVerge, through Modern Water’s unrivalled pathogen testing equipment plus the surging demand presently being received for Skin Trust Club’s home test kits, both of which are expected to be bolstered by further significant news releases in coming months, TPI retains its forecasts and ambitious financial model for DeepVerge.

A DCF-based valuation for the shares, which presently trade on a multiple of around 6x 2022E EBITDA, derives a price target of 94.7p. At this time, TPI does not publish a forecast or price target for Microsaic.

(Please note that TPI’s valuation is based on financial modelling and there is no guarantee that such a valuation will ever be realised, therefore please do not base investment decisions on this valuation alone. Also please note that past performance is not a reliable indicator of future results.)

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We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to DeepVerge plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination.

The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient.

Copyright © 2022 Turner Pope Investments (TPI) Limited, all rights reserved.


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