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Numis broker note on Synairgen says share price could more than quadruple

A newly published Numis broker note on Synairgen (SNG) has suggested that there could be 480 percent upside on its current closing price of 170p.

Following news this morning that Synairgen had commence phase III trials for its COVID-19 treatment, Numis updated its view on SNG, welcoming the trial as it applied a target price of 990p to Synairgen shares.

The broker note has a forecast that SNG could make £293m revenue this year with EBITDA of £233m – equating to a health earnings per share of 99.9p.

Numis’s rationale behind the bumper forecast mirrored much of what Synairgen has relayed to the market, including today.

This included the various use cases for SNG001 if it passes trials including helping to alleviate NHS pressures and helping to treat those that haven’t had the vaccine as well as that may have had the vaccine, but it was found to be ineffective.

Our View: Trial success means inevitable upside for SNG

Numis’s target price of 990p would give SNG a m.cap of over £1.5bn. While at first glance this may seem fairly lofty, it is hard to argue that SNG is due significant upside should its trial to be a success – a combination of successful trials, the inevitable confirmation of orders and a look into the future of the business should help it get near to this valuation. The big IF is around the trial, should this be a success, the rest will inevitably follow.

While news of vaccines and increased speed of roll-out is promising, the reality has since sunk in. Vaccines will take a great deal of time to be deployed and will not guarantee immunity for all, meanwhile COVID-19 is as dangerous and transmissible as ever.

Providing it is a success, SNG’s treatment will surely be at the top of the list for every hospital around the world, not only the NHS.

For investors willing to take a leap of faith, there does appear very significant reward on the table.

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