Judges Scientific

(JDG:AIM) £99.50

Gain to date: 0.7%

While it is frustrating to see one of our picks give up gains of more than 20% to trade flat on our entry price, we believe world-class scientific instrument maker Judges Scientific (JDG:AIM) has a lot more to offer investors who are prepared to stay the course.

WHAT HAS HAPPENED SINCE WE SAID BUY?

The shares topped £122 in May before the firm cautioned that first-half trading was below its expectations, largely due to a drop in orders from China, and it would miss full-year earnings estimates.

On 19 September the company released more detail on its first half, with revenue and profit declining as guided, and gave more colour on current trading.

As chief executive (and major investor) David Cicurel explained to Shares, China’s pivot away from spending on R&D (research and development) and towards boosting consumerism means orders for the firm’s high-end equipment from universities and companies have shrunk, and the country is only likely to account for around 10% of sales in future.

In addition, some projects which were expected to fall into the first half have been deferred until the second half or 2025, while the world has become ‘a very nervous place’, representing a headwind to scientific research, which thrives on free exchange and global cooperation.

However, the good news is the second half should show a ‘significant’ improvement, both in terms of contracts and margins, meaning the firm is sticking to its full-year outlook, and with the signing of a 2025 Geotek coring contract order intake is now ahead of the same period in 2023.

WHAT SHOULD INVESTORS DO NOW?

We would urge holders to look put the difficulties of the first half behind them and keep faith with the firm on the basis of its formidable long-term track record.

Despite the current headwinds, management is completely focused on shareholder value and has raised the first-half dividend by 10% in a sign of its confidence in the future. 

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