Small-cap stocks with growth potential can deliver great share price gains, and Bell Potter thinks they've identified two such companies.
They've released research reports this week into two companies in the healthcare sector, and are predicting solid gains for both.
Let's see who they like.
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Lumos Diagnostics Ltd (ASX: LDX)
This diagnostic technology company recently reported full-year revenue of US$13.2 million, up 6% on the previous year, and an adjusted EBITDA loss of US$2.8 million, which was a 19% improvement.
The company said it was a "landmark year underpinned by significant regulatory, commercial, and operational achievements that have positioned the Company for future growth''.
The company went on to say:
The year was highlighted by the execution of a transformational six-year U.S. distribution agreement with PHASE Scientific with a value of US$317 million, achievement of U.S. FDA CLIA waiver status for FebriDx, and securing nationwide Medicare reimbursement recognition across all U.S. Medicare Administrative Contractors (MACs). These milestones materially expanded the addressable market opportunity for FebriDx by more than 15 times to over US$1.0 billion per annum and established the foundations for large-scale commercial adoption in the U.S.
The company said FY27 will be about converting the regulatory and commercial milestones achieved in FY26 into sustained revenue growth.
Bell Potter agreed, saying the commercial execution of the FebriDx rollout would be the focus.
The broker is expecting Lumos to hit breakeven in FY29.
Bell Potter has a price target of 25 cents on Lumos, compared to the current price of 10 cents. Lumos Diagnostics is valued at $94.5 million.
Trajan Group Ltd (ASX: TRJ)
This analytical science company delivered second-half EBITDA of $8.1 million, up from $5 million in the first half of the year, but overall full-year earnings were down 14.7%.
Chief Executive Officer Stephen Tomisich said of the result:
FY26 was a year of two halves. While the first quarter created a difficult starting point for the year, the business recovered operationally from Q2 onward, and we delivered a materially stronger second half result. The benefits of Project Neptune and other operational initiatives became increasingly evident in H2, with improved gross margins, stronger nEBITDA and better cost control across the Group. These gains were partly masked in the reported result by the appreciation of the Australian dollar against key trading currencies.
The company's guidance for the current year is for mid-single-digit organic revenue growth in FY27 and double-digit EBITDA growth.
Bell Potter said the company "is trading at an extremely deep discount, but it will need to turnaround earnings momentum to shift investor sentiment''.
Bell Potter has a price target of 50 cents on Trajan shares compared to 16.5 cents currently.
