A City broker has raised its valuation for shares in NetScientific PLC (AIM:NSCI, FRA:NTK1), saying the potential of its investment portfolio still isn’t being fully understood or recognised by the market.
It was a topic touched upon in Wednesday’s interim figures: “The board remains of the view that the market significantly undervalues the group, with current price below fair value, but without taking into account growth opportunities.”
On Thursday the stock was trading at 123.6p, which is an almost 10-fold increase from where it was at its nadir in early 2020.
That said, the market capitalisation is currently around GBP25mln, which represents a significant discount to fair value, estimated in the six-month results to be GBP31.9m (up 50% year on year). The net asset value is put at GBP23mln.
WH Ireland, in a note to clients, said there were a number of catalysts “that could yield significant value inflexion points” for NetScientific.
Its ‘un-risked’ holding in PDS Biotech alone has a realisable value of GBP14.9m1n (70.9p) or 57% of the company’s market capitalisation, WHI pointed out, adding this was “illustrative of the inherent upside” of [NetScientific’s] model.
“In our view, little value is ascribed by the market to its subsidiaries Glycotest and ProAxsis, or to the growing value of CUA via EMVC in a range of diversified investments,” the broker added.
Retaining its ‘buy’ rating, WHI lifted its price target to 180p from 135p. The Investors Chronicle tip lifted its target to 199p.