Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Creo Medical: Initiation Of Coverage

Published 04/10/2021, 13:19
Updated 17/08/2023, 13:25

We are initiating coverage of Creo Medical (LON:CREO), which is developing and commercialising minimally invasive electrosurgical devices. Its CROMA platform delivers a combination of bi-polar radiofrequency (RF) and microwave energy for the purpose of dissection, resection, ablation and haemostasis of diseased tissue. The initial focus will be on gastrointestinal (GI) procedures but will expand into soft tissues (such as the pancreas) and pulmonology. The company has had all six products within the CROMA platform CE marked and four are also cleared for use by the FDA, with the other two expected to be cleared in the coming months.

EPS Estimates

Share price performance

Share price performance

Allowing for quicker and safer procedures

Creo Medical’s flagship Speedboat product allows for incision, dissection and coagulation to be accomplished with one device, leading to more efficient use of the surgeon’s time as there is less switching of instruments. With bi-polar RF, the current is restricted to a specific area, which should help reduce complications compared to monopolar RF, which drives energy across relatively large areas.

A large addressable market

Creo Medical products are in a large and lucrative market. Conmed estimates the GI endoscopic technologies market is approximately $3.0–3.2bn with the RF energy-based surgical device market at $2.7–2.9bn per year.

Albyn acquisition provides products and a salesforce

In July 2020, Creo Medical announced the acquisition of Albyn Medical, which commercialises products for the urology, gynaecology and GI endoscopy markets. Albyn Medical was purchased for €24.8m plus up to €2.7m in performance-related milestones. While full year revenues have not been disclosed, Albyn Medical was profitable with €1.7m in profit before tax (PBT) for FY19 and contributed £12.8m in sales to Creo in H121. Importantly, with this acquisition, Creo has also acquired Albyn Medical’s 70-person European sales and marketing team.

Valuation: £434m or 240p per basic share

We value Creo Medical at £434m or 240p per basic share using a risk-adjusted net present value (NPV) model. The vast majority of the value is attributable to the CROMA platform (especially the GI market) with the remainder divided between the value of Albyn Medical and net cash. Creo Medical had reported that it had £30.6m in cash and £10.7m in debt at the end of H121 and raised £36.3m in gross proceeds in a Q321 placement and open offer.

Click on the PDF below to read the full report:

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.