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Investing.com - RBC has reduced its price target for Diaceutics PLC (LON:DXRX) from 195p to 185p, citing unfavorable foreign exchange movements that impacted revenue estimates by 4-5%, while maintaining an Outperform rating on the stock.
Despite the price target reduction, RBC notes that its new target still implies over 50% upside potential from current levels, with shares having fallen more than 20% since their February high point.
The firm highlights the upcoming July H1 trading update as a potential buying opportunity ahead of Diaceutics’ anticipated return to earnings profitability this year.
RBC forecasts H1 revenue of £15.9m, representing 32% year-over-year growth at constant exchange rates, with the company having already reported £8.4m revenue (up 35% year-over-year) for the four months to April.
For the full year, the firm projects 26% constant currency revenue growth to £39.5m with an adjusted EBITDA margin of 17.8%.
The analysts were encouraged by Diaceutics’ commercial momentum, demonstrated by a 93% year-over-year increase in Total (EPA:TTEF) Contract Value to £18.7m in the four months to April.
However, they look for improvement in the multi-year order book, which declined at the end of 2024 despite strong one-year visibility.
On a mid-term basis, RBC calculates more than three times potential upside to the current valuation, based on expectations for sustainable margins in the high-20% to 30% range, and up to six times upside in a potential merger and acquisition scenario.
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