Advanced Medical Solutions Group PLC

Advanced Medical Solutions Group PLC (LON: AMS) is an FTSE AIM UK 50 Index listed Company engaged in designing, manufacturing, and developing surgical equipment and advanced wound care products.

AMS will pay a final dividend of 1.37 pence per share on 17 June 2022, while the ex-dividend date was 26 May 2022.

Investment Rationale – SELL at GBX 292.50

• Profit Booking: AMS’ stock price has yielded over 11% return since our previous coverage on 12 May 2022. The rally was also supported by the FDA 510(k) approval received for LiquiBand® XL (product to close longer wounds). Although the financial growth evident in FY21 results, the ongoing impact of Covid-19 and global supply chain snags can restrict the growth in the near term. Therefore, investors can book profit as per their risk-return profile.
• Global Risk Concerns: The prolonged Covid-19 curbs in China can exacerbate the supply chain issues. Moreover, monetary policy tightening, persistent inflation, and subdued economic forecasts can continue to impact corporate profits and put pressure on equity markets.
• Technical Indicator: The momentum oscillator 14-day RSI (56.28) is close to the overbought zone, while the price is approaching the upper Bollinger Band. Thus, the price can face retracement from the current levels.  
• Overvalued Multiples: On a forward 12-month basis – key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow) are overvalued against the median of the Health Care sector.

One Year Share Price Chart

 (Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

*Peers: ConvaTec Group PLC, Inspecs Group PLC, and Dechra Pharmaceuticals PLC.

*All peers are LSE-listed Companies from the Health Care industry.  

Conclusion

Based on the decent notional gains, macroeconomic instabilities, bearish technical indicators, coupled with the unfavorable valuation conducted above, we have given a "SELL" recommendation on Advanced Medical Solutions Group PLC at the closing market price of GBX 292.50 (as of 26 May 2022).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.