Alliance Pharma plc (APH.L) Growth Stock to Scoop Up
Strong cash generation
Alliance Pharma
Ticker: APH.L
Price: GBP 74.90
- Underlying earnings up 22% in 2019
- Integrating Nizoral acquisition from Johnson & Johnson
- Strong cash generation
See-through revenues for the 12 months ended December 31 were up 16% to £144.3mln, which translated to underlying earnings (EBITDA) of £39.4mln, up 22%.
The company’s star brands performed well, led by its Kelo-cote scar treatment. The figures additionally included a first-time contribution from Nizoral, the medicated shampoo acquired from Johnson & Johnson.
Forgetting the impact of Alliance’s recent purchases, organic top-line growth was a quite creditable 10%.
Cash generation was strong, which means the company’s net debt fell to £59.2mln from £85.8mln a year earlier, that meant Alliance’s leverage was 1.48-times earnings at the year-end, down from 2.33-times.
There was a sting in the tail for investors, though probably not entirely surprising, as Alliance decided to pass on the final dividend to conserve cash through the coronavirus crisis. It said it will reassess its position later in the year, potentially providing an interim payout.
In a statement at the company’s AGM in may, chief executive Peter Butterfield said while the company had seen “some impact on year to date revenues” due to the coronavirus crisis, it had been encouraged by the robustness of its product portfolio and anticipated that trading will be weighted to the second half of the year.
The CEO also said that the firm’s supply chain remained “robust” which it had not experienced “any significant supply disruption” because of the outbreak.
“With a strong balance sheet and significant covenant headroom, the board is confident that the group is well placed to respond to increasing demand as local lockdown measures are eased”, Butterfield said.
Business Summary
Alliance Pharma plc is a United Kingdom-based specialty pharmaceutical company. The Company is engaged in acquisition, marketing and distribution of pharmaceutical products.
The Company operates in various business areas, such as Hydromol, secondary care, community and consumer products, established products and international.
The Company’s therapeutic areas of focus include cardiovascular, central nervous system, child health, consumer health, dermatology, endocrinology, gastroenterology, obstetrics and gynecology, oral health, oncology, stoma care, toxicology and travel health.
The Company’s product categories include prescription only medicines, over the counter medications, medical devices, cosmetics and nutritional supplements.
The Company’s products include SkinSafe, Lift Plus, AbsorbaGel, DeoGel, LaVera, ClearWay, Gelclair, ImmuCyst 81mg, Hydromol, MacuShield, Lypsyl, Anbesol Adult Strength Gel, MolluDab and Ashton & Parsons Infants’ Powders.
Shayne Heffernan Trade Idea
“Our current price target of Alliance Pharma will come in around GBP 91.33 which will give the stock a price increase of +21.94%.”
Price Performance
Relative Valuation
Technical Indicators
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 73.96.
The projected upper bound is: 80.51.
The projected lower bound is: 69.81.
The projected closing price is: 75.16.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 17 white candles and 29 black candles for a net of 12 black candles.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.5714. This is not an overbought or oversold reading. The last signal was a sell 43 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.84. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 58 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 7. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
ALLIANCE PHARMA closed down -0.300 at 74.900. Volume was 35% below average (neutral) and Bollinger Bands were 75% narrower than normal.
Open High Low Close Volume 73.389 76.700 73.100 74.900 554,632
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 74.72 74.27 75.69 Volatility: 28 48 46 Volume: 572,007 809,078 900,407
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
ALLIANCE PHARMA is currently 1.0% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.
Our volume indicators reflect moderate flows of volume into ALAPH.L (mildly bullish). Our trend forecasting oscillators are currently bearish on ALAPH.L and have had this outlook for the last 20 periods.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of the London Stock Market.
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Sources:
Alliance Pharma Company Website
Thomson Reuters Metastock and Eikon financial tools
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