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Success of new device drives sales at Optos

SHARES in Optos, the retinal imaging specialist, have surged by more than six per cent after it hiked third quarter revenue by five per cent to $42 million (£24.6 million).

The company, whose high-resolution devices are used by optometrists and eye surgeons, credited strong demand for its Daytona device with driving sales in North America and Asia over the three months that ended June 30.

The Daytona, which was launched two years ago, is based on lighter and more user-friendly technology than the company's other, older machines. Optos intends to introduce different versions of Daytona for different functions in the coming years.

Dunfermline-based Optos, which employs about 200 staff at its manufacturing base in Fife, said the third quarter growth had lifted revenue for the year to date to US$114.7 million, up 1.5 per cent on last year.

The company added 364 new customers in the quarter, compared with 356 at the same stage last year. It has brought a total of 992 customers on board on the year to date, 17 per cent ahead of last year, with the growth driven by Daytona sales.

Optos said the latest growth in customer numbers took the number of devices it has installed to 6846, up 15 per cent on the 5945 installed at the start of its financial year.

While it has a presence in markets such as Australia, the company generates most of its sales in the US, with optometrists responsible for the bulk of Daytona sales.

The company noted that strong cash generation in the third quarter had helped it to reduce net debt to $19.5 million at June 30, some $26.5 million lower than at the same stage in 2013.

It said the progress made in the third quarter positions the business well before its traditionally strong fourth quarter.

The update sent shares in Optos up by 6.29 per cent, with the stock closing the day up 11p at 186p.

Broker Panmure Gordon hailed the update as "robust" and, while noting the company's reliance on the fourth quarter, upgraded its revenue forecast to $168.9 million. This compares with its previous forecast of $163.8 million and consensus of $165 million.

The broker retained its recommendation to buy the stock, and has set a target price of 235p.

Analyst Savvas Neophtou said: "In the context of previous profit warnings, we are heartened by signs of sustainable growth returning, although we note the tone remains somewhat circumspect, primarily because the business remains reliant on Q4.

"But in our view there was decent acceleration in Daytona placements which allows us to increase our forecasts modestly for the full year."

Optos chief executive Roy Davis said: "We continue to see sustained demand for our unique ultra-widefield products, in particular within North America and Asia, resulting in a 15 per cent increase in our installed base. Cash generation was particularly strong in the quarter, reducing net debt to $20 million, which is significantly below this time last year, setting us in good stead for the year. As we enter Q4, traditionally our strongest quarter, we remain confident on the outlook for the full year."

In May, Optos reported that pre-tax profits had more than doubled to $1.6m for the six months to March 31 thanks to improved margins and lower costs.

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