Brokers' views: Edison Investment Research

Dr John Savin and Robin Davison, analysts at paid-for research house Edison, are enthusiastic about prospects at pharmaceuticals group IS Pharma. They are forecasting that AIM-listed IS, expected to use the £3.6 million raised in a placing with healthcare fund Abingworth to help pay off any ‘contingent liabilities’ early, will pay a maiden dividend of 0.8p for the year to March 2011. That implies a modest, but welcome, dividend yield of just below 1 per cent at the current 81p share price.

Moreover, the pair draw attention to recent data from Japan indicating that Aloxi, IS Pharma’s treatment that helps manage chemotherapy side effects, has shown ‘prolonged efficacy’ in trials. This year, Edison forecasts growth in pre-tax profits from £3.7 million to £3.8 million, producing earnings of 9.1p, ahead of 9.3p by March 2012, when dividends should be maintained at 0.8p.

Matching up
In a note entitled ‘Matching up’, analyst Fiona Orford-Williams discusses the outlook for specialist recruiter Matchtech, forecast to pay a 15.6p dividend in 2011 and 2012 – the shares therefore offer a 7.1 per cent yield at the current 221p.

Orford-Williams says that ‘once the impacts of the coalition spending review are digested’, Edison would expect shares in Matchtech, which generates 43 per cent of net fee income from the public sector, to move ahead.

She argues that there is ‘good scope’ for price recovery at Matchtech, adding that with a forecast covered dividend and growth in pre-tax profits to £8.8 million on net fee income up £3 million to £29.2 million, the current rating
is ‘modest’.