Vectura reports strong rise in full-year earnings

Vectura´s full-year results edged past forecasts with analysts noting the sharp improvement in its free-cash-flow generation even as they pointed out several potential share price drivers which were looming increasingly closer on the horizon.

The manufacturer of airways diseases treatments said revenues rose by 24% to reach £72.0m (Numis: £70.3m), boosting the firm´s earnings before interest, taxes, depreciation and amortisation by 43% to £23.2m (Numis: £22.8m).

Ajusted earnings per share were up by 9% to 6.4p.

Free-cash-flow increased four-fold to £31.7m (Numis: £26,6m) thanks to lower working capital requirements, Numis analysts Stefan Hamill, Paul Cuddon and Sally Taylor said in a research note sent to clients.

Thursday´s figures were to be the company´s last before its merger wuth Skyepharma completed in a fortnight.

Looking ut to fiscal year 2017 and on a stand-alone basis Numis said the key growth drivers would the US launches of Ultibro and Seebri, which management expected in the second half of 2016.

Following that, markets would be looking out to July to see if GlaxoSmithKline will continue option-to-license agreement covering Breo/ Anoro/Incruse by July, the broker said.

"Both of these events are important near-term share price catalysts, while beyond this the potential approval of VR315 (substitutable generic Advair for the US) next May is coming into view and will be a key driver.

"We see further valuation upside post merger-completion and value the enlarged Vectura at 264p based on a blend of arisked DCF sum of the parts and a forward P/E," Numis said.

As of 11:29 BST shares of Vectura were off by 0.77% to 167.8p and below their 52-week high of 188.5p.