Peel Hunt ups rating on Medica

Peel Hunt has upgraded its rating on Medica Group following a healthy set of interim numbers.

The London-listed teleradiology specialist reported a 56% jump in revenues for the six months to 30 June, to £26.4m, while pre-tax profits surged 69% to reach £2.2m, as volumes recovered post Covid. Acquisitions also contributed to the strong performance.

The gross profit margin improved to 51.1%, from 47.1% a year previously, due to mixed and higher-margin acquisition activity. Underlying earnings per share rose to 2.8p from 1.2p.

In response, Peel Hunt upped its rating to ‘reduce’ from ‘sell’, and said it would review its forecasts with management.

The broker continued: “We were very pleased to hear that AI is now being put front and centre at the recent capital markets day on 7 September. This included radiologists talking about how transformative the technology was in reducing errors and improving outcomes and safety.

“While we may differ in terms of how Medica gets to ‘fit for future’ – we believe Medica should secure IP rather than partner – we were nonetheless encouraged. With the NHS reporting its biggest weekly fall in coronavirus bed occupancy for more than five months last week, we are less concerned for the immediate impact on business continuity.”

As at 1430 BST shares in Medica were trading 2% higher at 166.5p.