EKF Diagnostics share price jumps as it upgrades forecasts again!

The EKF Diagnostics share price has taken off again in midweek trading! Here are the key points of this UK healthcare share’s latest market update.

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The EKF Diagnostics (LSE: EKF) share price has been a bright spot in an otherwise gloomy market on Wednesday. Broader UK share prices continue to struggle as fears over rocketing inflation fray investor nerves. But EKF has posted strong double-digit gains after the release of fresh trading numbers.

At 74.8p per share, the EKF Diagnostics is currently 10% up from Tuesday’s close. The medical diagnostics giant touched three-week highs of 75.8p earlier in mid-week business.

A strong start to 2021

The EKF Diagnostics share price has risen 50% over the past year as demand for its medical kits has exploded during the pandemic. Indeed, the AIM-quoted company reported record sales and profit in 2020.

Pleasingly, EKF declared today that “this strong performance continues into the new financial year”. It has seen “a very meaningful recovery” in its core business, despite ongoing challenges created by Covid-19. In fact, EKF said it had “performed more strongly than expected”. That  included growth in the first quarter of 2021.

Furthermore, EKF said that it had “continued strong demand for our contract manufacturing services for Covid-19 sample collection devices and associated kits”.

EKF Diagnostics upgrades forecasts again!

Thanks to its strong trading in the year to date, EKF Diagnostics now expects to beat its recently upgraded full-year forecasts.

The business has a rich history of raising forecasts. And back in March it delivered another meaty upgrade to its full-year sales and profits expectations. This was prompted by the “significant expansion” of a multi-million dollar contract to supply Covid-19 sample collection kits to a global customer.

EKF said that March’s forecast bump was built “just on visible orders under the supply agreement and a continuing conservative approach to forecasting on the core business”. It said today, though, that continued strong trading during Q2 means that full-year trading should be “comfortably ahead” of that last upgrade.

Ambitious growth plans

EKF Diagnostics also painted a rosy picture for beyond the current period. It said that “there is clear scope to evolve our contract manufacturing activities beyond the current pandemic catalyst and to capture the significant additional potential for the core business”.

EKF unveiled steps which it believes will deliver “significant double-digit growth” in adjusted earnings during the next few years. These include investing in the core business to drive “aggressive” organic growth and targeting earnings-enhancing acquisitions. EKF said that it plans to spend between £10m and £15m to execute this strategy.

Finally, EKF announced that current chief executive Julian Baines will step down from the role to become non-executive deputy chair. He will be replaced by head of the company’s US operations, Mike Salter.

Today City analysts think annual earnings at EKF will rise 6% in 2021. This leaves the UK healthcare share trading on a forward price-to-earnings (P/E) ratio of 29 times.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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