Market appetite for UK shares remains quite sickly, as worries over rising inflation dominate investor thinking. Both the FTSE 100 and FTSE 250 are in the red in Wednesday trading, though not all British stocks are struggling for grip. The Science Group (LSE: SAG) share price, for instance, has soared following the release of fresh financials.
Prices of the consultancy group soared to fresh record peaks of 399p per share earlier in mid-week trading. They’ve settled lower but, at 390p, the Science Group share price remains 11% higher from Tuesday’s close.
Strong trading across Science Group
In today’s update, Science Group, which describes itself as “an international consulting services group supporting the entire product innovation lifecycle,” said all three of its divisions have enjoyed “a good start to the year.”
At its Services businesses, Science Group said its R&D Consultancy division — a unit responsible for around 44% of group revenues — “has seen particularly strong momentum in the Medical sector.” Growth here was strong in 2020, thanks to its participation in the UK government’s ventilator acquisition drive.
Elsewhere, Science Group said “the Regulatory & Compliance division has continued the progress demonstrated in 2020.” Finally, it added that its Frontier product division “continues to perform well with material supply constraints likely to be the biggest risk in the current year.”
On the back of this strong start, Science Group said it believes adjusted operating profit will grow 30% year-on-year in the first half of 2021. The company described it as “a particularly notable performance,” given the record profits it generated between January and June last year and the significant currency exchange headwinds it faces this time around.
Asset sale ruled out
Science Group also noted: “While it is still early in the year and the board is closely monitoring the impact of a strengthening sterling currency, this excellent start to 2021 provides a platform for the year as a whole and empowers the group management teams to continue to invest in future growth opportunities with confidence.”
Additionally, Science Group said it has decided to retain its Frontier division after floating the idea of a sale earlier in the year. The company said ongoing review of the unit “not only confirmed the strategic position of Frontier but also identified a number of opportunities to further enhance and develop the business which are currently being evaluated.”
Gross cash at Science Group stood at £29.5m as of 30 April, the firm said, while net funds clocked in at £13.3m. The company said added: “[Our] strong balance sheet and free cash flow generation enable [us] to continue to evaluate corporate opportunities to increase the scale and/or development of the Group in parallel with the organic investment activities.”
City analysts think annual earnings at Science Group will rise 2% in 2021. This leaves the company trading on a forward price-to-earnings (P/E) ratio of 19.7 times.
