Bought the pharm

I was looking at Immupharma over the weekend and clearly I was not the only one. Others were also digesting the company’s recent positive news and subsequent share price spike and decided there was more to come. The London-headquartered company, which has Swiss and French operations, aims to develop treatments for serious medical conditions with high, unmet medical needs and relatively low marketing and development costs.

Its share price spike began with publication of its six-monthly interim results on 27 September, which showed further progress on its lead programme Lupuzor, which promises a potential breakthrough compound for life-threatening autoimmune disease Lupus. It has trials across the US, Europe and Mauritius and has just initiated first regulatory submissions to the US Food and Drug Administration and the European Medicines Agency.

Capital move

Last week, it also announced it had completed its sharing agreement, which saw Lanstead Capital buying around £5m of ordinary shares in the firm. Immupharma chairman Tim McCarthy said the agreement should create long-term shareholder value and help it hit “key milestones within our lead programme Lupuzor, as we get nearer to reporting top-line Phase III results in Q1 2018”. The shares jumped even higher on the news.

But investing in companies like Immupharma will always be risky. One setback for Lupuzor and its share price could crash. It also has to shoulder R&D costs, which totalled £2.3m in first half 2017. It therefore made a £3m loss for the period, on top of £3.7m in H1 2016. Total assets now stand at £6.4m, up from £5.5m on 31 December.

However City analysts are optimistic, expecting six years of negative earnings per share (EPS) to reverse in 2018, hitting 9p, with the company finally swinging into profit to make an anticipated £12m. The best might still be to come, although more of that potential upside is now factored into today’s higher share price.

Rolling out the barrels

Eland Oil & Gas (LSE: ELA) is also spiking today, its share price up more than 5% at time of writing. The Nigeria-based producer also published positive half-yearly results at the end of last month, with total gross production more than doubling, from 429,627 barrels of crude oil to 954,728 million.

The £145m company has a current cash balance of $27.3m, strengthened by a successful £15.2m equity placing in June, and CEO George Maxwell hailed a “very positive” first half as production restarted and boosted cashflow, with the near-term drilling programme now fully funded. 

EPS success

City analysts are rather bullish, forecasting EPS growth of a whopping 17,262% in full-year 2017, followed by another 199% in 2018. No wonder the share price is up 45% in a year, from 43p to today’s 64p. Lowly 2016 revenues of £2.37m are now forecast to hit £52.77m this year and £160.73m in 2018. If you reckon the oil price recovery has legs, Eland Oil & Gas could be a good way to play it.

The post Why I’d still buy this growth stock even after today’s 20% spike appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Soaring higher

Defence play Ultra Electronics (LSE: ULE) soothed investor nerves in Friday trading after announcing a solid uptick in client activity.

While trading has been in line with management expectations during the quarter, the London business advised that “order intake for quarter one has been strong.” The order book has swelled to £833.5m as of the start of April, Ultra Electronics advised, up from £753.8m at the beginning of 2016.

This is great news considering that £100m worth of orders at Ultra Electronics had slipped into this year and beyond — broker Edison notes that “the first quarter improvement would tend to suggest that at least some of these have been recovered alongside significant elements of new intake.”

Indeed, the Greenford firm has also inked lucrative contracts with the Royal Navy and fellow defence giant Raytheon during the past couple of weeks alone.

The City expects earnings at Ultra Electronics to tick 5% higher in 2016, and a further 6% rise is predicted for next year. I believe that subsequent P/E ratings of 13.7 times and 12.9 times represent a decent level to latch onto the firm as market conditions seem to be improving.

Failing to ignite

Boiler builder Flowgroup (LSE: FLOW) has not fared as well in end-of-week trading, however, the stock recently dealing 12% lower from Thursday’s close. The business announced today that revenues galloped 21% higher during 2015, to £40.4m. But this could not prevent operating losses widening to £17.1m from £10m in 2014.

Flowgroup said that the adverse result reflected “increased investment in staffing levels and infrastructure in preparation for further growth across the business.” However, the engineer was also hampered by a delayed launch for its Flow boiler following a European Court of Justice ruling on energy-saving products, a move that could see VAT on the device increased to 20% from 5% from 2017.

Flowgroup completed first commercial installations of the product in April at the 5% rate, and believes that boiler sales and installations should continue to benefit from a reduced tax rate.

But of course this is not a certainty, and Flowgroup could see uptake of its cutting-edge tech slump should VAT charges soar. Such a scenario could see losses extended beyond 2017, as City forecasts currently suggest.

Driller dips

Shares in fossil fuel play Eland Oil & Gas (LSE: ELA) have continued to trade below recent five-month peaks in Friday’s session.

The company has announced plans to raise $15m through a book-build placing to accelerate the development of its assets in Nigeria. As well as funding the re-entry, completion and production of its Gbetiokun-1 well, Eland will also use the funds to build a supplementary export route for production. The remainder will be used for working capital purposes, Eland advised.

Positive testing results at the field have helped propel Eland’s share price in recent weeks, and the business hopes to produce 7,800 barrels of oil per day when production commences. Maiden oil is pencilled in for the second half of 2016.

The City expects Eland to bounce back into the black this year, and record earnings of 13 US cents per share. This projection leaves the firm dealing on a P/E rating of 3.1 times.

For some, this ultra-low reading may make the business an irresistible value pick. But I believe the uncertainty related to oil drilling — not to mention the wider supply imbalance hanging over the oil price — still makes Eland a risk too far at the present time.

The post Should you buy Ultra Electronics Holdings plc, Flowgroup plc & Eland Oil & Gas plc today? appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.