Creo Medical - Entering phase of accelerating growth inflection

FY22 was a key inflection period for Creo with significant traction in the adoption of Speedboat Inject (its flagship electrosurgical device) and its proprietary CROMA technology platform, reflected in major robotic deals with Intuitive Surgical and CMR Surgical. Total revenue growth (8% y-o-y to £27.2m) was in line with consensus (£27m) and was primarily driven by Creo's core technology business. Operating losses rose to £30.8m, affected by increased personnel and R&D expenses, although management expects a sharp reduction from FY23 following cost-optimisation measures implemented in H222. We expect further expansion of the Speedboat Inject user base (with an emphasis on training enrolment) to be the strategic priority in FY23. With the recent fund-raise of £33.7m (gross) in Q123, we estimate the company is funded to operational profitability in H126. Incorporating the improved cash balance post the reporting period, our valuation increases to £528m (150p/share) from £493m.

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