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Optos Extends Gains on Retinal Device Prospects: London Mover

November 26, 2012

Optos Plc (OPTS), a Scottish maker of scanners to detect eye disease, headed for the biggest four-day gain in more than seven months as investors bet that revenue growth will improve on sales of a new retinal imaging device.

Optos focused on commercializing the new Daytona product in the fiscal year ended Sept. 30, and “2013 is about expansion into new geographic territories and volume delivery,” Julie Simmonds, an analyst at Canaccord Genuity Ltd. with a buy recommendation on the stock, said in a note to clients.

The Daytona technology added to costs last year and crimped the company’s earnings margins. Now, Optos and analysts say the desktop retinal device will boost sales outside the U.S., where Optos generates most of its revenue.

The shares rose 3.9 percent to 192 pence at 1:20 p.m., extending the gain since the Dunfermline, Scotland-based company reported full-year results on Nov. 21 to 16 percent. A close at that level would be the best four-day performance since April 3.

“The guidance for next year for high single-digit sales growth was ahead of expectations,” Charles Weston, an analyst at Numis Securities Ltd with a buy rating on the stock, said in a telephone interview. “Consensus previously was that sales would be flat or potentially even down a bit.”

Optos’s share price compares with the average 12-month price target of 256 pence of six analysts surveyed by Bloomberg, offering a potential return of 34 percent. Only Vectura Group Plc, a developer of inhaled therapies for respiratory diseases, offers a higher potential one-year return among the 11 companies in the FTSE techMARK Mediscience Index.

Today’s increase pared the stock’s decline this year to 12 percent. Optos slumped 18 percent on May 17 after it reported high-than-expected costs.

Revenue adjusted for some items rose 37 percent last year to $196 million, beating the median of $191 million from seven estimates compiled by Bloomberg. Operating profit, net income and earnings per share were all ahead of estimates.

To contact the reporter on this story: Peter Woodifield in Edinburgh at

To contact the editor responsible for this story: Douglas Lytle at

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