OptiBiotix Health PLC (LON: OPTI)  

OptiBiotix Health PLC (LON: OPTI) is an FTSE AIM All-Share listed Life Science Company. It is involved in the development and research of microbiome modulators, mainly in the United Kingdom.

Development Pipeline

• Commercialization of NextGen Products: OPTI has commercialized next-generation products, including microbiome modulators (MM's) biotherapeutics, and a growing family of SweetBiotix® products.
• Upcoming Deals: The Company had made significant progress on the deals regarding LPLDL®/CholBiome® signed with Compson Biotechnology (Taiwan), INSCOBEE INC (South Korea) and Bioscience Marketing.

Growth Prospects

• Health Canada Approval: The Company had achieved an approval for the SlimBiome® by Health Canada, which is considered as the toughest regulatory body in the world.
• Business Scalability: OPTI had a wide portfolio of small and large partners, pharmaceutical specialists, and established retailers building an international brand presence.
• Expansion of Slimbiome: The Company had expanded limbiome containing products portfolio in Optipharm with the Optiman brand in July 2021. Moreover, the Company had also launched SlimBiome Metablic Support on TMall in Taiwan with MaxCare.
• Investment in SkinBioTherapeutics: The investment in SkinBioTherapeutics PLC grew from £8.96 million as of 30 December 2020 to £22.94 million as of 30 June 2021

Key Risks

• Federal Reserve Tapering: The expected Federal tapering at the pace of USD 15 billion per month starting later this month may adversely impact the equity markets. Moreover, the Bank of England decided to keep interest rates unchanged in its latest meeting.
• Potential delay in drug launches: Any delay in rolling out treatments could lead to a loss in revenue and market share to competitors.
• 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.
  

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

O'Hara (Stephen Patrick) is the most significant shareholder as it holds nearly 10.10 million shares as of 30 September 2021. 

H1 FY21 Financial & Operational Highlights (for the six months ended 30 June 2021, as of 30 September 2021)

(Source: Company Results)

• Robust Revenue Growth: The sales of LPLDL® and SlimBiome® had resulted in strong revenue growth of around 44.5% to £1.076 million for H1 FY21. 
• Strong Divisional Performance: The revenue for the ProBiotix division went up by around 5% to £536,225, and the PreBiotics division’s sales grew by approximately 35.6% to £539,819.
• Decent Profitability: On the profitability front, the Company had achieved approximately 59.6% increase in gross profit and a 4.8% increase in gross margins during H1 FY21.

Financial Ratios (H1 FY21)

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

On 11 November 2021 at 10:05 AM GMT, OPTI’s shares were trading at GBX 48.33, down by around 3.34% from the previous day closing price. Stock 52-week High and Low were GBX 69.00 and GBX 45.00, respectively.

From a technical perspective, the MACD line remained above the signal line, indicating an upside potential in the stock price. 

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Business Outlook

OPTI remained financially robust to meet or exceed the full-year sales forecast boosted by the rising brand awareness and increased sales of the first-generation products. Moreover, it would continue to develop the scientific and clinical evidence base required to de-risk the innovative second-generation products.  The Company had enhanced the collaboration activities to broaden its product ranges (Optipharm, H&B) and territories (Optipharm, Seed Health) which would drive the recurring revenue base. Considering the penny nature of the stock, OPTI may undergo a sizable correction because of the rising interest rates prospect, global inflation, and lower-than-expected UK GDP growth. Overall, the Company aimed to deliver long-term growth by focusing more on customer needs, and clients can take a reasonable position based on their risk appetite.

Considering the healthy development pipeline, strong revenue growth, robust profitability, strong liquidity profile, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on OptiBiotix Health PLC at the current price of GBX 48.33 (as of 11 November 2021 at 10:05 AM GMT), with lower-double digit upside potential based on 24.06x EV/NTM Sales (approx.) on FY21E sales (approx.).

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

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

*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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