NextGen Group

SPECULATIVE BUY

16/02/2011 Ben Jaglom

Biotech minnow NextGen Group (NGG) is hoping to grow profits through its specialist services.

The AIM-quoted company, which has its operational hub in the US and a sales and administration team in the UK, specialises in biomarker discovery and the development of assays. Its divisions include assayexpress, a service for developing protein biomarker assays, testingexpress, a means of testing and validating samples in a biomarket study and discoveryexpress, a suite of methods and platforms for biomarker and drug target discovery.

Growth Company Investor spoke to Klaus Rosenau, the German CEO and veteran of a number of German IT concerns. Enthusing that he has 'a lot of contacts' within the investment industry Rosenau remarked on the recent excitement in the AIM biotech sector. 'Biotech is taking off at the moment - this is because those analysing the market as a whole realise that now is probably the best time to jump on the train'.

Regarding the future of the company Rosenua commented that having recently received £927,000 via Teilfonds Zeus, a Luxembourg based fund managed by the 'family trust management' company, the company has the cash needed to develop its intellectual property.

NextGen, like many AIM biotech stocks has recently seen a flurry of activity since the success of Sareum, with the shares having risen 58.3 per cent today to its current price of 0.38p, partially driven by the intense speculation on message boards which have contributed towards the see-saw changes in the share price experienced by many AIM biotech stocks. As a result our recommendation on NextGen Group is on a fundamental and relatively long-term basis, not on the basis of hourly price fluctuations.

With the sector as a whole currently experiencing a rerating we believe that NextGen's shares are an appropriate investment as a speculative buy for investors willing to take some risks on the sector, with NextGen in particular looking to have strong prospects operating in a relatively unexciting area of the biotech sector that has for a while been overlooked by many.

As a result we rate the shares as a speculative buy, though the shares are strictly not for widows and orphans.