Bioventix PLC (LON: BVXP) – Stellar 20% growth in the interim dividend for H1 FY21 

Bioventix PLC (LON: BVXP) is an FTSE AIM All-Share index listed Company specialized in the development & commercial supply of high-affinity monoclonal antibodies for applications in clinical diagnostics. BVXP has a portfolio of around 20 antibodies that are sold globally to in vitro diagnostics (IVD) companies. Moreover, the Company takes almost one year to create new antibodies.

On 18 October 2021, BVXP will release FY21 results for the 12 months ending 30 June 2021.

Recent trend of dividend payments 

The Company had announced around a 20% increase in the interim dividend related to H1 FY21 driven by resilient business performance. BVXP had paid an interim dividend of 43 pence per share on 23 April 2021, while the ex-dividend date was 08 April 2021, while it had paid an interim dividend of 36 pence per share for the prior year.

Growth Prospects

• Pollution Exposure Test: The Company had witnessed an accelerated progress regarding the development of the pollution exposure assay. Moreover, BVXP will also have a urine lateral flow test featuring a field trial at a UK industrial site during late 2021.

• THC Sandwich: BVXP had received excellent feedback for the samples of THC antibodies sent to a few selected customers. Moreover, THC is the active ingredient in cannabis or marijuana. It would improve the THC lateral flow assays for saliva.

• Commercialization of Biotin Blockers: BVXP had sent samples of “blocker” antibodies to customers during late 2020. Moreover, the customers had given encouraging feedback for the blockers. Thus, the Company had considered the possible commercial development of these blockers with bulk manufacturing at low cost.

Key Risks

• Compliance Risk: The Company operates in a highly regulated market, and any non-compliance with rules and laws could lead to penalties and loss of reputation.
• Increasing competition: There is a risk that blood testing manufacturers may opt for alternative antibodies that would affect BVXP’s ability to generate revenue.
• Financial Risk: The Company requires funding for product development programs and commercialization efforts, and any delay or failure to attain the funds could lead to delay in operations and plans.
• Covid-19 pandemic: The routine diagnostic activity might get dented because of the further adverse impacts of the Covid-19 pandemic.
  

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Bioventix PLC.

Sanford DeLand Asset Management Limited is the most significant shareholder as it holds nearly 0.99 million shares as of 30 June 2021. 

H1 FY21 Financial & Operational Highlights (for the six months ended 31 December 2020, as of 29 March 2021)

(Source: Company result)

• The revenue had shown a marginal growth of around 1.3% to £5.2 million during the period.
• On the profitability front, the profit before tax got declined by around 9% to £3.7 million during H1 FY21.
• The revenue made from troponin antibodies had witnessed a significant rise during the period. However, the revenue for vitamin D antibodies remained on the lower side.
• BVXP had a year-end cash balance of £5.8 million, an increase of around £0.3 million from the prior year.

Financial Ratios (FY20) 

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

On 15 July 2021, at 08:45 AM GMT, BVXP’s shares were trading at GBX 3,870.00, up by around 0.52% from the previous day closing price. Stock 52-week High and Low were GBX 4,549.24 and GBX 3,751.06, respectively.

From a technical perspective, the 14-day RSI of ~31.74 is indicating an upside potential in the stock price. Moreover, the stock price is hovering around the lower Bollinger band, supporting the upside movement in the stock price.

Over the last five years, BVXP’s stock price has delivered a positive return of ~344.89%, and it has outperformed the FTSE AIM All-Share index (benchmark index) with a return of about 71.53% and FTSE All-Share Pharmaceuticals & Biotechnology (benchmark sector) with a return of around 29.27%.

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Peers used in the valuation methodology (Price/NTM Earnings) 

Business Outlook Scenario

BVXP had delivered encouraging business performance during H1 FY21 with the continued success of the core antibody business. Moreover, the Company had expected troponin revenues to remain strong during H2 FY21 as well.  However, the Company had also raised regarding the timing of a complete return to global normality. It is expected the rollout of troponin would maintain the current momentum and neutralize the adverse impact of modest sales lost in other areas. Furthermore, the research projects had shown accelerated progress with further technical success. Overall, the Company expects to deliver resilient business performance during the second half of the year, with modest growth to be witnessed in vitamin D antibody sales. 

Considering the decent H1 FY21 financial performance, strong liquidity profile, zero debt on the balance sheet, robust profitability, interim dividend growth for H1 FY21, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Bioventix PLC at the current price of GBX 3,870.00 (as on 15 July 2021 at 08:45 AM GMT), with lower-double digit upside potential based on 28.46x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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