Shareholders of mobile money firm Monitise (LSE: MONI) and life sciences company OptiBiotix Health (LSE: OPTI) have experienced very different fortunes in 2015. Monitises shares have lost 88% of their value since the start of the year, while OptiBiotixs have rocketed 295% higher.
Can Monitises shares bounce back in 2016, and can OptiBiotixs continue to soar?
Founded in 2003, and listed on AIM in 2007, Monitise was one of the great story stocks on Londons junior market. The company was loss-making, but was first-mover in developing a mobile banking platform, which it hoped would become the global de facto standard for mobile banking and payments.
Two years ago, Monitise was valued by the market at over 1.3bn, but the shares have collapsed from 80p to just 3p, and the market cap today is a mere 66m.
The company continues to collaborate with blue-chip partners, such as IBM, Banco Santander and Telefonica, but has lost Visa as a supporter; and with Apple, Google and others also pushing their own mobile payments systems, Monitises dream of world domination is well and truly over.
The big question now is whether Monitise can still find a way to be profitable. For years, the company has been promising break-even was just around the corner: 2011 was the original target and the current target is the year ending 30 June 2016.
Monitise had 89m cash on the balance sheet at 30 June 2015 and the company has said this wont fall below 45m in the year to June 2016. However, with strategy changes and the company now on its third chief executive this year, there would appear to be a significant risk of break-even being pushed further out again and the cash continuing to drain away.
In the prevailing circumstances, its hard to see the market valuing Montise much above the level of its cash, and the best hope for an uplift in the shares would appear to be a bid, or a rumour of one. Monitise briefly put itself up for sale earlier this year when the shares were trading in the 15p-20p area, but rejected proposals which it said undervalued the company. Investors taking a punt at 3p today could easily be rewarded with a 50%+ gain, if suitors return, but its a highly speculative bet.
OptiBiotix, which was founded in 2012 and listed on AIM last year, is also loss-making, but appears to me to have a better outlook than Monitise at the present time. At a share price of 79p, OptiBiotix is valued by the market at 58m 8m less than Monitise.
OptiBiotix is focused on tackling obesity, high cholesterol and diabetes and has built a portfolio of 11 patents on compounds that change the way that microbes in the body work and interact. Newsflow has been good on clinical studies, patent filings and progress towards commercialisation, including an option agreement with a multinational consumer goods company in relation to its cholesterol reducing product.
Newsflow, rather than financial numbers, will likely drive OptiBiotixs share price in the coming year, as it has in the current year. There appears no reason to think that newsflow wont continue positive and continue to drive the shares higher. The current valuation seems hardly excessive for a company with clear opportunities to bring new treatments to large and lucrative markets and a 50%+ gain could be on the cards for 2016.
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G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise and Alphabet (Google). We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.