Hang on - the house broker reckons that TAD will only make £900K next year. Either they know nothing (entirely plausible, admittedly), or the figures being implied by the pro camp are wildly optimistic.
If the 900K is correct, then what drives the valuation of TAD? I realise that, in the past, when it was a speculative play on their tech, the valuation was driven largely by speculation on the future prospects, on news, rumours etc. But when/if it actually starts to make a profit, surely it must start to be valued on a P/E basis?
If that is the case (and I'm open to arguments about why it might not be), then a P/E of 50 only gives a share price of 15p - and that's a hell of a high P/E, imho. There are only 69 shares on the whole LSE with P/Es of 50 or over - admittedly, a lot of them are speculative tech plays, but why should TAD be rated that highly?
I'm not saying that 15p is the cap on the share price - speculation could inflate the share price way beyond that - but by any sane scheme of valuation it ought to be, provided the broker EPS estimate is correct.
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