Eye scanner-maker Optos (OPTS) has rebounded from last year’s profit warning to report a strong first half with hints that further growth is on the way.

The Scottish concern leaps 11.2% to 187.1p on its pre-tax profits improving 128% in the six months to 31 March at $1.6 million. This followed an 89% drop a year earlier to $700,000, with the conditions in Europe shouldering most of the blame.

Optos welcomed more than 600 new customers during the first six months of the year, boosting its installed devices to some 6,500, which are mainly its Daytona devices.

Positive news also flows from other areas of the business. It reported an improved $3.8 million cash-flow during the period, which helped slice some $20 million off net debt during the period, which now stands at $35.5 million.

Optos expects to meet its guidance this year thanks to a 10% increase in demand for its machines by the interim stage. Growth will be supported next financial year by the launch of two new devices and an anticipated $4 million reduction in costs.

Web - Optos - 15 May 2014

Analyst Julie Simmonds at Canaccord Genuity is upbeat, pointing out that Optos has stepped up its clinical activities in the past three years and that improved credibility is important for sales and new product launches. ‘These devices are targeted at the more clinical end of the market (clinical optometrists and ophthalmologists) therefore clinical/academic validation of the technology essential.'

Charles Weston at stockbroker Numis is also optimistic. ‘We continue to project pre-tax profit to quadruple over the next three years, based on strong Daytona momentum, declining manufacturing costs and an increasing level of contract renewals, as well as the introduction in 2015 of an integrated ultrawidefield OCT instrument and a sleeker 200Tx that will be cheaper to manufacture.’

Issue Date: 15 May 2014