ECO Animal Health likely to continue strong profit growth - Cenkos Securities

Cenkos Securities issued a note on ECO Animal Health Group (LON:EAH) in the wake of the specialist veterinary drug company’s full-year results this week, which came in at the broker’s expectations and revealed “encouraging trading”.

Revenues in the year to end-March 2010 climbed 15.2% from £18.9 million to £21.77 million. Gross profit climbed from £7.7 million to £9 million and pre-tax profits increased from £1.4 million to £2 million.

Cenkos expects the group to continue to produce step increases in profits as new marketing authorisations are granted and products launched.
“Based upon current multiples the shares look fairly valued, however, once ECO has gained marketing authorisations in its major markets it will represent an attractive takeover target for an international pharma group that would be able to multiply ECO’s profitability several fold through distribution and marketing synergies. Any bid would most likely be a multiple of the current price (130p at the time of publishing),” the broker said.