Diagnostic products developer Akers Biosciences Inc moved from loss to profit in 2008.
The improvement was helped by the sale of the intellectual property to its Free Radical Enzymatic Device for $3m. Most of that revenue will be recognised in the 2008 figures. Arbuthnot forecasts profits of $2.7m on sales of $6.5m in 2008, rising to profits of $4.9m on sales of $11.6m in 2009.
Akers will continue to manufacture assay tubes for the Free Radical test in return for a fixed price for three years plus a royalty per tube. That means that this will contribute more to revenues in 2009 than in 2008.
Delays to finalising the US military budget reduced 2008 demand for breath alcohol tests for armed services. The contracts have moved into 2009 so this year breath test revenues will be much higher.
The shares are trading on less than 10 times 2008 earnings.
Akers is estimated to have around $5m in cash. That could rise to more than $8m by the end of 2009. Akers also has significant tax losses so it will not be paying tax for many years. Management will consider spending some of this cash on dividends, a share buy back or acquisitions.
Akers is looking for small diagnostic companies with good ideas but they are running out of cash.
At 14p a share, Akers is valued at £15.6m.
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