Broker: Daniel Stewart
Company: Ilika
Share price: 50p
Target price: 89p
Recommendation: Buy
Daniel Stewart argues that materials discovery technology developer Ilika has several products that could have a market value in excess of $1 billion.
Ilika has already secured a number of major corporate partners, including Toyota, Shell and Toshiba, and it has a partnership-led commercialisation strategy which guarantees a route to market. IP is retained or jointly retained by Ilika.
The cash flow forecasts suggest that Ilika should have enough cash until it moves into profit.
Daniel Stewart warns that Ilika is currently dependent on Toyota, which constituted 53% of its 2010-11 revenues, and any reduction in support could hit revenues.
A discounted cash flow valuation provides a fair value of £32 million for Ilika, which is how the broker calculates its target share price of 89p.
