Consort Medical

BUY

24/10/2011 Ben Jaglom

Medical device manufacturer Consort Medical (CSRT) is hopeful that it can continue to win market share in the asthma sector.

The FTSE Small Cap constituent sells a range of products across its two divisions: Bespak, which specialises in making devices such as inhalers for the respiratory market and Kin Systems, a producer of 'airway management' devices. One of its key products is the diskus, a dry powder inhaler sold for asthma sufferers which last year reached the milestone of having manufactured its 500 millionth device.

For the year to April, Consort produced a strong set of results, growing pre-tax profits to £12.7m (2010: £10.5m) on revenues of £126.8m (2010: £118.6m). Net debt stood at £33.8m (2010: £33.2m).

The company is led by chief executive officer Jonathan Glenn, who joined as finance director in 2006 before being appointed to the role of chief executive the following year. Since taking the reins Glenn led the takeover of Sheffield-based injectable drug specialist The Medical House, acquired in 2009 in a deal worth £16.8m.

Looking ahead the business aims to achieve organic growth both through recurring revenues and through its King Vision laryngoscope (A device placed down a patients throat to examine the larynx) which it claims to be able to sell at what it says is a 'considerable discount' to rival products such as US healthcare concern Verathon's Glidescope.

Analysts at Collins Stewart are forecasting pre-tax profits of £18.5m (EPS: 44.8p) on turnover of £129.1m for the year to April 2012. In 2013 profits of £20.2m (EPS: 49p) on revenues of £134.75m are expected.

Growth Company Investor recommended shares in Consort in August of 2009 at 382.25p and they have since climbed to 540p. Operating in a sector currently out of fashion with investors the company has recurring revenues, is highly cash generative and holds a competitive position in its key markets. Buy.