Gooch & Housego, the self-styled ‘optoelectronics’ manufacturing play 40.9%-owned by the Gooch family, beat analysts’ forecasts with strong half-time figures to March. Pre-tax profits grew 56% to £1.98m, on a 23% hike in sales to £10.9m, and earnings soared 55% to 6.5p. Chief executive Gareth Jones explained that the year started with strong order books thanks to a demand surge in 2004. One ‘unwelcome’ consequence was a backlog of shipments and high lead-times, but sustained higher production and a levelling-off in demand have brought lead times back to normal. During the half, demand for optical components at Gooch & Housego in the UK was very encouraging – the UK operations benefited from working through a large order backlog for Q-switches, devices that sit inside medical/industrial lasers and ‘turn them into useful tools’. Despite a softening of demand and margins, Florida-based acousto-optics outfit NEOS managed to sustain high levels of sales and profits. Jones is now focusing on IP creation by using components expertise to design new higher- or added-value instruments and systems, and the recent purchase of land for a new UK manufacturing facility has brought plenty of capacity for growth. For the year, Oriel Securities has upgraded ‘adjusted’ pre-tax forecasts from £4.1m to £4.3m, off an expected sales jump to £22.4m (£18.8m). On forecast earnings of 14.8p, the forward rating looks undercooked. Strong buy.