BTG plc (LON: BTG) (LSE: BTG.L) has today released an update to coincide with its AGM. Its performance since 1 April has been in-line with previous expectations and its underlying guidance for the full-year is unchanged, with it including the nine months of costs and revenues relating to the acquisition of Galil Medical.
With sterling having weakened dramatically in recent weeks, BTG’s guidance may be changed. It was set at an exchange rate of £1/$1.45, but should the average rate for the remaining nine months of the year be £1/$1.35, BTG’s sales guidance would change to £510-£540 million, while its SG&A expenditure would be £165-£175 million and R&D investment would be £90-£100 million.
In terms of its net income, the foreign exchange benefit from weaker sterling would mostly be offset in the near term by foreign exchange losses on existing forward contracts which have been used to hedge future US dollar cash flows.
BTG is making progress within its main divisions. Its Interventional Oncology products continue to perform well, while its blood clot treatment products are doing likewise. BTG is also making steady progress in establishing appropriate insurance coverage for its varicose veins treatment, while Specialty Pharmaceuticals has delivered a steady performance during the period.
In spite of this, BTG’s share price still lags those of sector peers GlaxoSmithKline plc (LON: GSK) AstraZeneca plc (LON: AZN) and Smith & Nephew plc (LON: SN) over the last month. BTG has risen by 3%, while GlaxoSmithKline is up by 15%, AstraZeneca has risen by 12% and Smith & Nephew is up by 10%. Further, US-listed peer Merck & Co., Inc. (NYSE: MRK) has also beaten BTG’s performance in the last month by 1%.
BTG has a P/E of 29, which is higher than for a number of its sector peers. However, it is forecast to raise EPS by 25% next year and when combined with the progress made in its divisions, holds appeal in my view.
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The author owns shares in GlaxoSmithKline and AstraZeneca at the time of writing.