The Braveheart Investment Company (LSE:BRH) share price is currently trading near 12p with a market cap of roughly £7.5m after spiking earlier this month. One of the private equity group’s businesses, Paraytec, announced that its cancer- and pathogen-identifying test instruments are ready for sale. Needless to say, this is excellent news for the business, and investors are understandably excited by the growth potential that lies in store.

PCR testing is most commonly associated with detecting Covid-19 following the 2020 pandemic. However, its applications extend beyond just one virus¹. As such, the firm has estimated that the global PCR testing market could reach as large as $26.12bn by 2027.

That obviously presents an exceptional growth opportunity. So, can the Braveheart share price continue to skyrocket in the long run? Let’s explore.

Key points

• Paraytec’s cancer- and pathogen-identifying test instrument has passed its CE marking, certifying it’s ready for use within laboratories.
• Braveheart share price enjoyed a bullish phase throughout 2020 till the first quarter of 2021.
• Investors are relieved to see the return of the bullish trend in Q2 2023.

What does Braveheart do?

Braveheart Investment Group Plc is a UK-based private equity and venture capital company. It makes strategic investments in various businesses its analyst team believe will outperform.

Its investment companies include:

• Paraytec Limited – Braveheart owns 100% per cent of the company. Paraytec develops high-performance detectors for the analytical and life sciences instrumentation market.
• Kirkstall Limited – Braveheart owns 80% of the company. It operates as a biotechnology company and specializes in products and services supporting in-vitro cell culture research and the development of routine in vitro testing.
• PhaseFocus Holdings Limited – Braveheart owns 44.69%of the company. The company is developing a series of patented computational imaging techniques with a wide range of applications, including live cell imaging, engineering metrology and electron microscopy.
• Autins Group Plc – Braveheart owns 12.91% of the company. It manufactures and supplies acoustic and thermal insulation solutions for the automotive industry and other sectors.
• Aukett Swanke Group Plc – Braveheart owns 19.37% of the company. It is a professional services group that principally provides architectural and interior design services in the primary international market sectors of offices, residential, education, industrial, hospitality and mixed-use or ‘hybrid’ developments.
• Velocity Composites Plc – Braveheart owns 4.13% of the company. It seeks to reduce customers’ operational costs by providing engineered kits that reduce all forms of waste from the composites supply chain.

The bull case for the Braveheart share price

Braveheart Share price enjoyed a bullish phase throughout 2020 till the first quarter of 2021. That’s hardly surprising given the business was one of many that ended up profiting from the Covid-19 pandemic².

From a price of 10p at the start of 2020, the stock continues to rise, reaching as high as 140.2p in early 2021. A rapid decline quickly followed this and then another spike before resuming a fairly consistent downward trend. Seeing this level of volatility from a penny stock is hardly unexpected. But what was behind this constant fluctuation in direction?

The reason behind this huge spike is the commencement and successful completion of the development of a rapid Covid-19 test.

Additionally, one of the major advantages investors enjoy is the stability of the company’s free cash flow. This is a healthy sign for all potential investors as it allows investment in new technologies as well as in new product segments.

The bear case for the Braveheart share price

The bearish journey of Braveheart’s share price started at the end of the first quarter of 2021. The stock started its downward decline from the peak price of 116p and continued this trend for more than two years. And since then, Braveheart shares have declined by a jaw-dropping 88%!

This continuous decline has been due to multiple factors, the most recent being the loss of Germany-based Cytena as a lead distributor. Also, the adverse reaction of investors to the positive operational update in 2021 surprised analysts. And this seems to be a classic case of “buy the rumour, sell the news”.

Despite holding a diversified and seemingly solid portfolio of companies. Braveheart’s market capitalization stands at a modest £8.92m. Moreover, the company’s profitability is still low, further dampening the company’s future growth potential – at least in the short term.

Braveheart share price prediction

As with any small-cap company, share price forecasts can be wildly inaccurate. This is mainly due to the fact that smaller businesses are typically surrounded by significantly more uncertainty. However, they can still provide some useful insight into the opinions of other industry experts.

Today the Braveheart share price predictions range between 13.18p and 14.28p, with 13.85p being the approximate average expectation from industry experts.

Should I buy Braveheart shares today?

Braveheart Investment Group continues to walk on its strategic path. Its investments are still far from proven. But there is no denying the potential for rapid growth.

In the recent interim results, the company reported the total value of its investment portfolio of £5,128,000, an 8.7% increase from the previously reported figure during the first quarter. This uplift is undoubtedly an encouraging sign. And given the recent developments among some of its portfolio businesses, this upward trend may only be getting started.

Its recent results did reveal a loss of 1.19p per share for the six-month period. However, that is a significant improvement versus the 4.85p loss reported a year prior. And it’s yet another signal that Braveheart’s investments are starting to pay off.

Therefore, all things considered, I’m tempted to open a small speculative position for my portfolio within this AIM-listed company today. The risks remain high. But I believe the company is en route toward a profitable path, with the potential to skyrocket in the long run.

Article sources

1. Medical News Today, “What to Know about PCR Tests“
2. The Arm Chair Trader, “Braveheart Investment Group on track for Covid-19 rapid test“

Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.