Sunday share tips: PureTech, Driver Group

The US, Cambridge-based outfit's business model consists in spinning-off companies focused on various medical technologies as separate companies, onboarding other investors along the way, while obtaining royalty payments too.

Its products include Plenity, the weight-loss pill, or Akili, a video-game geared towards children with attention deficit disorder and treatments for cancer and hair-loss.

To take note, the addressable market for Plenity is very large, with roughly 150m Americans now classes as overweight.

And while PureTech turned a loss of $135.4m last year, on sales of just $9.8m, it has raised over £1.2bn from investors, meaning that it has enough cash to last it until the first quarter of 2024.

Furthermore, of the 24 products in its pipeline, 13 are in the clinical stage, the tipster added.

Another attraction of the firm was its "all-star" board, amongst them Christopher Viehbacher, the former boss of French vaccine-maker Sanofi, or Dame Marjorie Scardino, the former head of Pearson.

Some analysts, such as Peel Hunt, also saw a promising future for the company, arguing that "further successes in PureTech’s pipeline will enhance its value".

The Midas column's Joanne Hart recommended Driver Group to investors, highlighting the new management team's change of focus, the potential benefits of the Covid-19 pandemic and Prime Minister's infrastructure drive as reasons for confidence in the potential for share price gains.

Driver Group specialises in resolving disputes in the construction and infrastructure space, such as those that arise when there are cost-overruns, helping companies identify the origin of the problems and the best way forward.

"Driver's shares are at 63p and should gain ground in the next two to three years," Hart said in the Mail on Sunday.

Central to her investment thesis was Mark Wheeler, the firm's new boss, who had nevertheless been at Driver for over a decade.

"Driver is in sound hands under his stewardship," she said, calling attention to Wheeler's plans to grow internationally and into specialised areas, where a higher return on investment can be achieved.

The company also moved quickly to anticpate the impact of the pandemic, such that now other companies look to it for advice and will continue to do so.

Then there are Boris Johnson's exhortation to "build, build, build" to get the country out of its current funk.

But big, and sometimes complex, infrastructure projects inevitably hit snags along the way, and that's where Driver Group come in, Hart added.

There were also hopes that Driver might soon reinstate its dividend payout.

"The business has been trading profitably, there is cash in the bank and the outlook is benign.

"Prime Minister Boris Johnson wants this country to ‘build, build, build’ its way to recovery, and he is not alone in this. But when ambitions run high and money is tight, disputes are likely. As a building resolution specialist, Driver is ideally positioned to smooth the way. At 63p, the shares are a buy."