Clinical trial company Cogstate Ltd (ASX: CGS) reported its half-year results last week, and it's making at least one broker sit up and notice.
The team at Canaccord Genuity has had a look at the result and likes what they see, reiterating a bullish share price target for the company's shares.
So let's have a look at what was reported.
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Solid profit growth
Cogstate reported group revenue of $26.9 million, up 12% on the previous corresponding period, while net profit was up 16% to $4.5 million.
The company also said it executed clinical trials and sales contracts worth $4.17 million, up 105%, with contracted future revenue increasing to $104.9 million.
Cogstate said regarding the result:
Cogstate continues to demonstrate strong growth with compelling evidence of maturing operational leverage. The business is increasingly well positioned to win market share with CNS (central nervous system) drug commercialisation expected to be among the fastest growing areas of pharmaceutical research and development spending, second only to oncology.
Gostate chief executive officer Brad O'Connor said the company had good momentum and an increasingly strong competitive position.
He added:
We're seeing record levels of sales opportunities from an expanded customer base across more therapeutic indications, and those opportunities are converting into meaningful contract wins. The quality of our sales performance is as important as the quantum. With 45% of our 1H26 contracts coming from mood, sleep and neurological conditions beyond Alzheimer's disease, we're demonstrating the diversification and repeatability that creates long-term value. Our investments in channel partnerships, scientific expertise across new indications, and our proven track record of delivering successful large-scale trials are all translating into tangible commercial results.
Shares looking cheap
The team at Canaccord Genuity ran the ruler over the results, and they like what they see.
They have maintained their buy recommendation on the shares, with a price target of $3.15.
They said in a note to clients sent out this week:
The company's interim result likely doesn't elucidate the growing moat in Cogstate's business, and how that could emerge over the coming years in its profit and loss. The type of business being secured by Cogstate is more diversified (expansion outside of Alzheimer's Disease), and increasingly more predictable. This allows investors (and us) to frame Cogstate based on its core business, and recognize the large, and somewhat irregular, Phase III Alzheimer's' Disease trials as additional (big) sugar hits on top of a quality underlying business.
Cogstate was valued at $373.9 million at the close of trade on Monday.
