AMS (Advanced Medical Systems). The next BULL stock.

30/11/06 Equity Growth Research

Advanced Medical Solutions announced yesterday that they have received US FDA
510(k) clearance for their silver alginate dressing for extended use of up to 21 days.
This feature makes it more effective in terms of cost and provision of undisturbednhealing for the wound and, therefore, represents a clear marketing advantage. Thenmarket for silver technology based dressings is estimated to be US$100m but growing rapidly at about 25% pa. AMS management believe the market for silver alginate dressings to be about $25m.

The wound-care market globally is experiencing annual growth of 8-10% but AMS is
expected to achieve 15% growth in revenues this year and next, as its pipeline of new products, combined with a geographic roll out of existing products, provide incremental revenues. As the silver alginate sales gain traction in the US over the next year this will inevitably affect the prospects for 2008.
Our current forecasts are for an EPS of 0.4p for 2006, doubling to 0.8p for 2007, a prospective PE of 13.7x based on the current price. The operational gearing will maintain this trend of exponential growth in profit beyond 2007, based on an undemanding 15% growth in revenues. Adding further excitement to the stock is the cash accumulation, now over £3.0m, which could lead to an acquisition.