OPTS – Optos – orphan NFSC

My late write-up on an orphaned stock for the Nicky Fraser Share Competition over at Paulypilot’s Pub on TMF.

This was the primary entry by Adam, who sadly didn’t complete his entry in time for the NFSC. I’ve been away from this board for some time, so I didn’t see that I had missed the deadline for orphaned submissions. I thought people might find it interesting anyway. I like to watch Adam, as he did me proud with a previous suggestion of Clearstream Tech, which has since been taken over. He’s kindled my interest in growth stock investing, and I’ve certainly been doing better lately with growthy type companies as opposed to the trash. If only I had kept away from the garbage! Oy vey.

BASIC STATS

Share price: 212.6p

Mkt cap: £152m

Index: Smallcap

Sector: Healthcare equip and services

Yield: 0%

PER: 11.3

ROE: 23%

Gearing: 25%

Z score: 3.57

Net debt: £15.9m

BRIEF COMMENT ON THE NUMBERS

Valuation levels look reasonable if you buy into it as a GARP play, with comfortable debt levels and a healthy return on equity.

MISC COMMENTS

Total director shareholdings is sub £200k level, which is somewhat off-putting.

The company appears to be off most people’s radar.

WHAT IT DOES

Optos plc is a retinal imaging company. The Company’s medical devices produce ultra-widefield, high resolution digital images of approximately 82% of the retina in a single capture. The Company designs, develops, manufactures and markets retinal imaging devices that create optomap images. The Company operates in two segments: North America and the Rest of World markets. Its retinal imaging products include P200 device and 200Tx device. Its medical/surgical devices include Advant YAG Laser and FastPulse Laser. Its diagnostic instruments include visual acuity chart and AP300 automated perimeter. In October 2011, it acquired the business of the instrumentation division of OPKO Health, Inc. In October 2011, it acquired optical coherence tomography (OCT) and ultrasound products to enhance its diagnostic device range. During the fiscal year ended September 30, 2011, the Company acquired Opto Global Holdings Pty Ltd.

So basically, it takes pictures of a person’s retina. The pictures it takes are "ultra wide field", in other words, it images a lot of the retina. This is useful, because there can be interesting things to see that aren’t captured by narrower images. Their "optomaps" can scan 82% of the retina, something that no other device is capable of doing in any one image.

OTHER COMMENTARY

Optos’ widefield retinal imaging technology, combined with the specific data that can be derived from OCT images, has the potential to offer ophthalmologists and optometrists the most powerful tools for disease diagnosis and management. The optomap images provide enhanced clinical information which facilitates the early detection, management and treatment of disorders and diseases evidenced in the retina such as retinal detachments and tears, glaucoma, diabetic retinopathy and age-related macular degeneration. Retinal imaging can also indicate evidence of non-eye or systemic diseases such as hypertension and certain cancers.

OUTLOOK AND SOME CHRONOLOGY

OPTS has something I like to see: "things are going in the right direction". The company is developing products, bringing them to market, and growing.

On 25-Aug-2011, OPTS received clearance from FDA in US to market its Project Daytona device. Daytona is the company’s next-generation ultra-wide field retinal scanning device. The product is designed to offer optometry customers higher quality images of the retina, from a much smaller device than Optos’ alternative scanners. In addition, the new device brings improved reliability and a superior patient interface and software for image review. http://bit.ly/xhqMok

On 25-Sep-2011, agreed to acquire the assets and business of the instrumentation division of OPKO. OPKO Instrumentation is engaged in the development, manufacture and sale of optical coherence tomography ("OCT") diagnostic devices and optical ultrasound scanners, each used by the ophthalmic and optometric professions in the diagnosis and management of eye disease and conditions. The Acquisition brings access to established OCT and ultrasound products together with a product pipeline including a lower-cost OCT product (Falcon) nearing market launch. Significant opportunities exist to accelerate sales through Optos’ direct salesforce of over 80 representatives and to derive selling, marketing and operational synergies from combining Optos’ business with OPKO Instrumentation. http://bit.ly/xayofF

On 02-Nov-2011 announces it has now received CE mark clearance for its Daytona device. http://bit.ly/wfKyoG

On 23-Jan-2012 OPTS releases its IMS for 3 m/e 31.12.2011. Results are good: 20% underlying revenue growth, overall revenues up 63%. "We are pleased to have delivered continued strong revenue growth in the first quarter and trading continues to be strong in the early weeks of the second quarter. We are receiving good levels of interest in Daytona and are on track for launch this quarter. There has been continued demand for our other core products, including the 200Tx from ophthalmologists and the P200C, which remains an attractive proposition in a number of markets. We continue to work on developing the clinical data to support our technology and have been pleased with the addition of OCT to our portfolio which has attracted interest from all customer segments and from distributors in our indirect markets." http://bit.ly/ygJV7g

On 15-Mar-2012, OPTS secures first major international order for Daytona. "Over the second half of this year, Optos will deliver to OPSM 160 Daytona devices each on a rental basis. … Daytona represents the next generation of Optos ultra-widefield retinal imaging technology, and has been scaled to accommodate smaller office spaces while providing high resolution imaging, and adding new auto-fluorescence capabilities.Daytona was designed to allow the globalisation of the core Optos imaging technology, giving the opportunity to offer the benefits of optomap technology to more eyecare professionals and their patients around the world. … We are delighted to enter into this agreement with the leading optometry chain in Australia and New Zealand which brings the opportunity to move ultra-widefield imaging towards the standard of care for retinal imaging in these countries. This is tremendous validation of our strategy to develop the Daytona device in order to take this sight-saving technology to broader markets. Furthermore, it is clear that our decision to acquire the Opto Global business in Australia and expand the direct salesforce there has opened a strong new territory for Optos." http://bit.ly/vZbJsx

Seems like an exciting growth play at reasonable price.

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About mcturra2000

Computer programmer living in Scotland.
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