International Medical Devices Share Discussion Threads

[robbie12] 13/6/2003 08:38

Moving pretty sharpish - still not really got my head round it - time to jump in and follow the herd?

[edbassett] 13/6/2003 00:25

yes NJP, looks like the MM are happy to tick the price up

I feel this will signal a potential bottom and other buyers shoudl follow soon

Happy to hold anyway, its quality stock

[njp] 13/6/2003 00:11

Yes, noticed the flurry of activity today and added a few myself. Was also looking for a lower price but it's ridiculously cheap already. 2003 may be a difficult year for the distribution division but that's been more than discounted in the price.

PS See a 250k below mid price has appeared. Presumably matched by the earlier buys above mid. Maybe the overhangs are clearing.

[edbassett] 13/6/2003 00:07

was waiting for 130p, seen a bit of buying so back in for 10000 at 146.5

feel that this is due a strong bounce soon

[njp] 12/6/2003 18:04

Robbie

The company's sound, but margins reportly are under pressure at the distibution division - strong euro doesn't help and company mentioned impending patent expiry of Zocor. However the outlook guidance was for double digit growth over the next few years with a nod towards the manufacturing division (60% of last year's profits) and the investments they've made there.

Some took it as a veiled profit warning that the H1 / H2 profit split - traditionally stronger in the second half - is likely to be more pronounced this year. Given that the market was much more nervous when the announcement was made, this no doubt fuelled the selling.

Earnings concensus has been trimmed recently, but is still 21.3p for 2003 and 24.6p for 2004. Note the 15% growth factor. I can understand the falls from the 280p level but not the current price.

The stock has obviously suffered from an overhang and, indeed, there may still be some left to shift, but it's ripe for a sizeable move upward when this happens. This is pharmaceuticals fer gawd's sake, not metal bashing!

[robbie12] 12/6/2003 15:31

Interesting volume in this - don't know the first thing about it but will give it the once over. Appears cheap but margins under pressure: if it hits its targets and reaffirms going forward a forward PE of 6 is clearly a little ridiculous.

[njp] 05/6/2003 14:45

jeffian

Couldn't agree more! In fact the NHS has already proved it's failure in this arena in the past and closed units down to save money. Why on earth would they want to do this again? As you say - totally against the grain of current thinking and a complete waste of resources!

PS As to the idea that the risks will be reduced by investing in a string of 'in house' specials units, you have to laugh! The money would be far better spent beefing up the MCA inspections process IMO.

[jeffian] 05/6/2003 14:19

Well my initial reaction is that in the era of 'outsourcing', Private Finance Initiatives, de-nationalisation etc. etc. the idea of using valuable NHS resources to set up in competition with commercial producers is against the whole run of current thinking and, probably, political dynamite as well (even if Gordon Brown did let it happen), or have I got the wrong end of the stick?

Regards, Ian

[dispenser] 05/6/2003 14:02

The following article applies not only to intercare, but also to other specials manufacturers. making specials is very proffitable and so may be affecting int's shareprice

From the June issue of Community Pharmacy

Specials Manufacturers fear the Department of Health could endanger there future

The Specials manufacturing industry is waiting with bated breath for news from the DoH

The promise of millions of pounds of investment in the nhs is usually cause for cheer. However, chief pharmaceutical officer for England Dr Jim Smith's announcement of a £42 million spend over three years on technical services has sent a chill wind through the commerical specials manufacturing industry.

The problem is that the investment, revealed at the recent Guild of Healthcare Pharmacists Conference, comes on the back of a closed circulation DoH document entitled RISK ASSESSMENT OF UNLICENSED RELEVANT MEDICINAL PRODUCTS (SPECIALS). And no one in commercial specials manufacturing has been involved in deciding what investment is needed or where it should be spent. The result is that the industry cannot be sure the money money won't be spent on developing competitive specials manufacturing services within the NHS.

As well as the propect of major, if not dominant, competition, commercial specials manufacturers fear the move could prove disastrous for patient outcome, ie what happens if the NHS-based manufaturing operations do not cover costs, do they draw on resources that should be directed else where. While the uncertainity continues, manufacturers may be delaying or modifying investment plans as NHS Trusts become more reluctant to enter into contracts in the belief that thy soon could be able to secure money for capital projects

dispenser

[danny murphy] 05/6/2003 08:11

NJP

Spot on NJP and that's why I am looking for a buying opportunity in the 120 - 125p range.

[njp] 03/6/2003 14:27

Yes, I noticed that, boadicea, and fully agree with the sentiments expressed. INT would be a good investment right now but chartwise it's not shown evidence of bottoming yet. Any general market weakness over the summer won't help either.

[boadicea] 03/6/2003 14:15

My thanks to mjneish (on CEL thread) for spotting this item from IC Small Cap Review on Life science sector.

"Last but not least there's Intercare. The pharmaceuticals supply chain services specialist has had a pretty grim 12 months in its distribution division with margins under huge pressure. I'd be very surprised if 2003 was very happy year for Intercare - although the manufacturing operations (providing out sourced drugs for instance) do seem to be holding up well. Even if things are very turbulent in 2003 - and Intercare is bound to be hit by the dreadful market conditions in the Life Sciences industry - I suspect its shares are cheap at 7 times forecast earnings for 2003. But the proviso is that Intercare actually hits those targets of profits of £22m, which may be a super human task all things considered. Still this is my long term recovery bet - give it three years and I think its shares could be hugely re-rated.

[danny murphy] 27/5/2003 17:27

PUG

Yes, Mail on Sunday tipped in the MIDAS column

I am looking for a buying opportunity in the 120 to 125 range here.

It may take 2 or 3 months though.

[njp] 27/5/2003 14:22

PUG

One of the papers (Mail?) did mention growing interest from fund managers. PE of 6.6 and div yield of 3.9% make it look a bargain.

[pugugly] 27/5/2003 14:21

Up 7% today after days of doing nothing - However 1 big sell against lots of small buying. The fact that a 100K plus sale against lost of small buys suggests to me that the (or an) institution/s want out.

Anyone know if and where tipped?

[njp] 23/5/2003 09:42

PUG

INT paid 7 times earnings for Martindale. Thought that was a bargain at the time, but now we see INT on not much more than 6! Martindale is continuing to perform as expected so that isn't the problem!

As for OYS, I think there's a total lack of faith in the management. The market obviously disbelieves the profit projections and has lost patience waiting for an IP deal. Having said that, I perhaps ought to qualify my use of 'market' and substitute 'major investors'. They need another Ennismore, but obviously no-one's tempted to step up and replace those leaving by the revolving door. CS still act as if they have an overhang.

[pugugly] 23/5/2003 08:30

NJP- Sorry may have used the wrong language - I was using IP as a shorthand for intangible assets - and thus including "goodwill". As I interpret it from the accounts they paid very substantialy over "real value" (which I define as the money they would obtain if they sold the factories, leases, and machinery. as ) What I am trying to work out is whether the income stream they bought worth what they paid. Sorry if I have caused any confusion.

This is a similar exercise to OYS where the pure IP appears to be negative, however the share price is continualy falling and raising in my mind questions about the value of the ongoing businesses purchased, rather than the value of the Oyster patents - If you get my meaning.

[keyboard] 22/5/2003 16:15

Boadicea et al:

Most opinions expressed here make good sense and I would add that apart
from NJP's hope that Directors could help by 'some convincing buying'
they could at least issue a statement as to why the share has fallen
to these lows and is continuing to fall, unless, of course, they think
the bottom has not been reached yet.
Also, I am not sure that the euro argument is that convincing.
Take a European investment trust like TRG which has risen from
100p on 30 October, 2002 to 120p now and you can understand my
line of reasoning! I just think there is something we do not know...!

[njp] 22/5/2003 16:11

Boadicea

The euro impacts mainly on distribution margins rather than manufacturing. Indeed, a good part of INT's manufacturing operations are in Euroland. As for Martindale, if, as I suspect, they source their ampoules from Veramic, the money stays in the group.

[boadicea] 22/5/2003 15:55

Thanks for your thoughts, PUG and others.
Effect of Euro will I suppose, depend on where the competition is (or could be)manufacturing corresponding drugs.

[njp] 22/5/2003 14:41

PUG

The IP is tiny, as a glance at the AR will tell you! The vast bulk of the amortisation relates to goodwill on acquisition and most of that relates to manufacturing and the Martindale acquisition, and here they are following the conventional 10 year write down period. What there is in IP is just product licences, which I know are amortised prudently.

As for the fall, there might well be an overhang to clear. Only guessing, but I find it very difficult to explain the drop purely on tighter margins in distribution. There's no catastrophes that I'm aware of of the GSD kind and 2003 eps concensus, though reduced recently, is still 23p!

Not time to go in big yet, IMO, but when it does bottom there's plenty of scope for profit! Would help to see some convincing director buying.

[pugugly] 22/5/2003 13:51

NJP> Have not yet been able to get any real handle on the validity or otherwise of the IP writedown period of 10 years chosen by the Board. Looks as though I will have to try nad have a talk with the FD.

imo the point you have made above re the strong euro could probably be the reason for the continuing fall in the share price (1 of only 2 shares at year low today).

Unfortunately I cannot calculate the effect of the weakening £ from the accounts - but given that there are major maufacuring plants in the euro area any exports from these plants to non euro countries would be likely to put export margins under very significant pressure.

[the other kevin] 22/5/2003 09:31

As far as TA is concerned I think we are now in uncharted territory but I would hope for some support in the mid 1.30s.

[njp] 22/5/2003 09:09

boadicea

Shorters have played with INT in the past - certainly when the general market was weaker earlier this year. I believe the TA target was 130p to 140p based on the break of an H&S neckline at 210p. There may also have been forced sellers.

The company have drawn attention to pressure on distribution division margins in the AGM statement, mentioning loss of patent protection on Zocor and the strong euro as reasons. They haven't publicly warned on earnings, unless one takes the comment on a weaker H1 as opposed to H2 as constituting one.

Manufacturing earnings were specifically reported as strong and this contributes 60% of group earnings. Latest earnings concensus, per FT, is 23p for 2003 and 25.4p for 2004, which puts INT on a PER of just 6.5 at a price of 150p. Also, don't forget the dividend. If it falls much further, it almost starts to become a yield play.

Conclusions: I'd say INT is already well oversold but still in downtrend.