Cello Health Share Discussion Threads

[jeff h] 19/9/2010 16:06

Rated a "Buy" by the IC on Friday.

[stegrego] 17/9/2010 21:17

Hybridan

Cello Group (CLL 46p/£28.25m)
Cello continues its impressive share price performance with a further rise of over 25 per cent since the end of July when we last commented on the Company. Today it announced its half year results showing headline ongoing operating profit up 25 per cent to £3.3m (2009: £2.6m), margins improved to 10.9 per cent (2009: 8.9 per cent) and net debt down to £11.7m (2009: £14.8m).
The fall off in income from the public sector has not impacted materially the overall mix of business, with the top 20 clients from 2009 remaining significant revenue generators for the Company in 2010, with many increasing their levels of expenditure. The largest customer accounts for only 4.4 per cent of total income, with the top 20 customers for less than 40 per cent. The robust Pharmaceutical sector on the other hand now accounts for over 25 percent of the group's income. The Company thus appears to have created a secure and solid base from which to advance.
On the results the CEO commented "We are now seeing a pick up from our clients in the private sector across a range of industries....(and) have started to carefully organically expand the business again". This positive statement, along with the small 5 percent increase in the interim dividend bodes well for investors who we expect to continue to support the progress of this growing company.

[jeff h] 17/9/2010 16:10

Singer Capital Markets is initiating coverage of market research and consulting group Cello with a positive recommendation, saying that most of the company's earn out obligations from previous takeovers are behind it and the company is in a position again to expand through acquisition.

The company's recent interim results demonstrated a return to positive growth despite extreme near term headwinds in the public sector, which Singer rates as "an exceptionally strong performance in this context."

The broker thinks there are three main reasons to buy the shares.

First is the aforementioned revenue growth. "Acquisitions are back on the agenda and will enhance growth. Cello's biggest business segment, Healthcare, is driving growth and international expansion offsetting the short term public sector headwind," the broker said.

Cello chief executive Mark Scott told Sharecast earlier this week that the company "will buy again, probably in America" and that the plan is to double the size of Cello in the next two or three years.

The second reason to buy cited by Singer is the company's strong positions in market research and healthcare. These are "scarce assets in a consolidating market."

The broker also believes the shares are undervalued because the earnings are in the low part of the cycle. Compared to the valuation of its peers, the stock is cheap, and Singer thinks it is also undervalued on a sum of the parts (SOTP) basis and as a prospective takeover target.

The stock trades on 6.6 times projected earnings per share for 2010 while the ratio of enterprise value to earnings before interest, tax, depreciation and amortisation is just 4.6.

"This is clearly low," the broker argues. "If the share price does not recover then it is possible that Cello could become a target, given the scarcity value of its two operating units. We use a blended SOTP and peer based valuation to derive our 12 month target price, which we set at 71p, indicating over 50% upside," the broker concluded

[santangello] 16/9/2010 22:21

Lovely 6 figure buys today. I have added.

[coopstock] 14/9/2010 09:42

Looks like full year profit before tax will be about £6m, putting Cello on a multiple of 5. Peers Creston and Chime rate at 8/9 (even these are low due to market sentiment towards the sector). Debt under control, no earn-outs to come. This should be 75p now, with more value to come for faith in the firm's prospects, sector upgrades and credit for management performance.

[maksud] 14/9/2010 09:03

undervalued. suprise no uplift in share price.

[interceptor2] 14/9/2010 08:16

Strong interim results and management sound confident for 2010 and beyond.

Good to read that due to strong cashflow, net debt has fallen faster than anticipated. I would expect this to continue into second half.

Regards ic2............

[glasshalfull] 14/9/2010 07:57

Well done to the Cello team.

Very good performance and good to see that they have been able to address fall off in Public Sector work.

Regards,
GHF

[santangello] 14/9/2010 07:52

.....now for the re-rating, broker upgrades and perhaps the MBO?

Very pleased with todays numbers, and a solid hold for me.

[santangello] 05/9/2010 18:09

Agree with that inter.....

14th not that far off now.....

[interceptor2] 03/9/2010 16:51

Late RNS today with news Octopus Inv have increased holding to over 9%.

Great to see Octopus increasing their holdings, because they are one of three Investment companies I have alot of respect for. Along with Blackrock and Slater Inv.

[qs9] 31/8/2010 20:33

Well looks like 50p around the corner IMO. Half year results will make interesting reading for any move higher.

[santangello] 31/8/2010 18:43

ello Jeff......now I am happy knowing me old mukka is here too.

You OK fella ??

Think I am in another of yours too.....EMR??? Another nice day their too.

[glasshalfull] 31/8/2010 16:34

Thanks Jeff. Interesting.

Regards,
GHF

[jeff h] 31/8/2010 14:07

The reason this one being bought is the IC reckon the directors cheesed off with the low share price and may launch a MBO unless it's re-rated.

[santangello] 27/8/2010 15:38

So many being bought, this is unusual....and VERY interesting.....and I agree that on pure value and e.p.s, 40's will be a thing of the past VERY soon.....

[felix99] 27/8/2010 13:28

how high - dunno but I just added some more

[spooky] 27/8/2010 12:51

Earnings expectations are for 7.2p going to 8.4p,on that basis a lot higher than 40p.

[coopstock] 27/8/2010 10:45

How high can they fly?

[santangello] 27/8/2010 09:15

These have now seriously broken out.

[interceptor2] 26/8/2010 19:03

I will second that Hmmm.....

With the large transactions this morning, followed by a large amount of small purchases.

Looking like a good run up to Interims 14 September.

ic2.....

[glasshalfull] 26/8/2010 17:27

Hmmmm ;-)

Regards
GHF

[santangello] 26/8/2010 17:08

Pre results buyers apperaring.

Still VERY lowly rated...

[santangello] 26/8/2010 10:36

Interesting 6 figure trades this am. Results around the corner............

[glasshalfull] 23/8/2010 19:41

Recent trading statement was bullish, only negative was weakness in Public Sector business. The company indicated that this had been offset by Private Sector wins.

That said, ATG released a dreadful update. Especially poor in relation to the downturn in healthcare - "considerable slowdown" - which ic2 alludes to. CLL have been conservative in their recent market updates and I've every confidence. Market are simply looking for further confirmation before any significant rerating will occur IMO.

Regards
GHF