It has been a good year for anyone invested in Spectra Systems (SPSY:AIM) since early 2015 with the stock having increased by 24% in value year-to-date. Those that missed out on the rally still have a chance to profit, according to analyst forecasts for the stock.

WH Ireland's latest 43p price target implies that anyone buying at the current 22.88p price could nearly double their money. But before you jump straight in, there is a negative to consider.

The shares (14 Aug) suffer a 5.2% drop in the value as the market doesn't like news of a contract modification.

The banknote technology solutions group says a covert materials supply contract with a European partner will have minimum order quantities worth approximately $0.7 million (£449,000) per year, including a 7% increase from 2016 in the price of materials.

Over the 2015-2019 period the modified contract is expected to secure $6 million of revenue, working out at $1.2 million per year. That is down on the $1.6 million average annual revenue achieved between 2010 and 2014.

Spectra CEO Nabil Lawandy comments: 'This contract modification further underscores the stability of our banknote security business and also increases our margins going forward. Whilst the contract specifies minimum quantities, we would anticipate quantities equivalent to those of the prior period coupled with the benefit of the price increase.'

Analysts at WH Ireland say the new deal increases earnings visibility and highlights the cash-rich balance sheet at Spectra. Cash net asset value is estimated to be worth 18p per share, a significant proportion of the current share price.

Spectra suffered a massive blow last October when a banknote cleaning test was unsuccessful in Mexico, wiping off a third off the company's market value in a matter of days. The stock has enjoyed a recovery rally this year thanks to stake building by activist investor Worsley which now owns 10.28% of the business.

The shares also got a boost in July from a contract with a Chinese manufacturer of secure documents. That deal relates to the supply of at least $5.6 million of high-margin materials and up to $0.5 million of hand-held readers, over a term of nine years.

Issue Date: 14 Aug 2015