In a recent research note, Research Analyst Chris Glasper of Singer Capital Markets highlights the robustness of NIOX Group plc’s (LON:NIOX) performance, following a positive AGM and encouraging first-half trading. As FeNO testing gains traction globally, particularly in the United States, NIOX continues to capitalise on both clinical and research markets, delivering consistent growth and strengthening its cash position. This article explores the key takeaways from the research note, directly quoting Chris Glasper where possible, and outlines the operational and financial highlights that underpin Singer’s Buy recommendation.
AGM Points to Positive Start to Year
Chris Glasper opens his commentary by noting the company’s solid momentum to the end of April, stating:
“Revenue growth has strengthened to +21% to the end of April, driven by an ahead of expectations performance from the Research segment. Having updated our forecasts last month, we make no further changes at this stage, but will review these again at the H1 update in July. It is gratifying the business has continued to perform strongly during the inevitable distractions of recent months.”
This upbeat assessment follows the AGM announcement and reinforces Singer’s view that NIOX is well-positioned to capitalise on a substantial growth runway as FeNO testing becomes more widely adopted.
Clinical Segment Performance
The Clinical division remains the bedrock of NIOX’s business, with sales up 10% on a constant exchange rate basis year-to-date, fully in line with management’s expectations. Key developments include:
- Continued expansion of FeNO testing penetration, especially across the US market
- On-track launch of the upgraded NIOX PRO device later in the year
- Ongoing early development of the NIOX MyNO home-use device
- Minimal impact from macro-economic uncertainty and tariffs, thanks to recoverable pricing strategies
As Chris Glasper observes, “Clinical sales are up 10% CER YTD, in line with management’s expectations. The focus continues to be on accelerating penetration of FeNO testing, particularly in the US. The new upgraded NIOX PRO device is on track to launch later this year and early development work continued on the NIOX MyNO home use device” . This segment’s steady performance underpins the group’s defensive growth characteristics.
Research Segment Strength
The standout feature of the update is the Research segment, supplying devices and consumables into the clinical-trial market. Here, revenues have more than doubled year-to-date, buoyed by increased activity in both established asthma studies and a growing number of COPD trials. While Singer cautions that orders can be lumpy and margins slightly lower, the momentum is unmistakable:
“The standout performance so far has been the Research segment … Revenues have more than doubled YTD on the back of increased trial activity around both the traditional asthma studies, but also a number of new studies around COPD. We caution visibility is limited and orders can be lumpy in this segment, which is also slightly lower margin than the Clinical business, but this is nevertheless a very encouraging trend.”
This research-driven growth offers potential upside to Singer’s forecasts, underlining the strategic importance of NIOX’s diversified model.
Financial Outlook
Having refreshed forecasts last month, Singer makes no further changes at this stage, modelling:
- Group revenue growth of 12.7% for the current year
- A 50 basis-point improvement in operating margins to 27.3%
- Adjusted EPS (fully diluted) rising from 2.6p in 2024 to 3.1p in 2025, and dividends increasing gradually to 1.50p
Chris Glasper emphasises the conservative treatment of deferred tax, noting it “distorts and is not reflective of the economics of NIOX, given the very substantial tax losses the business is carrying” . This approach ensures the underlying health of the business is clearly visible.
Key Highlights
- Revenue Growth: +21% CER YTD to end-April
- Clinical Sales: +10% CER YTD, new NIOX PRO on track, MyNO development ongoing
- Research Revenues: More than doubled YTD, driven by asthma and COPD trials
- Net Cash: Increased to £14.5m at end-April (from £10.9m at FY24 end), after bonus payments and legal fees of £0.3m
- Forecasts Unchanged: Group revenue +12.7%, operating margin +50bps to 27.3%, EPS 3.1p in 2025
- Valuation: Buy rating maintained, 75p target price implies 10.3% upside
Final Thoughts
Singer Capital Markets remains confident in NIOX Group plc’s trajectory, viewing it as a high-quality defensive-growth stock well worth a place in core holdings. The combination of consistent clinical performance, burgeoning research market opportunities, and a strong balance sheet supports a Buy recommendation with a 75p target price.
