Oxford Nanopore Technologies PLC (LSE: ONT)

Oxford Nanopore Technologies PLC (LSE: ONT) is an FTSE 250 listed company that specializes in molecular sensing using nanopore technology. The company creates sequencing tools designed for analyzing DNA and RNA. Its operations are divided into two main segments: Life Science Research Tools, which delivers products and services for scientific studies, and COVID Testing, which offers solutions for detecting SARS-CoV-2. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 118.87

• Resistance near Current levels: ONT’s stock price breached Resistance (R1) which was stated in the previous report on 10 April 2025 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Continued Significant Losses Raise Concerns Over Path to Profitability: Despite revenue growth and improvements in gross margin, Oxford Nanopore reported an adjusted EBITDA loss of £116.1 million for FY24, a deterioration from the previous year’s loss of £104.9 million. This persistent deficit, paired with ongoing high operational expenses and only gradual progress toward profitability (breakeven projected by FY27), may raise red flags for investors assessing the company's financial sustainability. While second-half cost control showed improvement, the overall scale of losses continues to underscore the challenge of translating technological innovation into a profitable business model.
• Reliance on Federal Funding Exposes Revenue to Policy Risk: Oxford Nanopore has flagged a material dependence on US federal funding, particularly from the National Institutes of Health (NIH), which could account for 10–15% of total revenue. With budgetary uncertainty and potential funding cuts looming, especially in the US, the company's future revenues may face external risk factors beyond its control. This reliance could limit the Group’s short-term growth prospects and introduces a degree of volatility that may concern risk-averse stakeholders.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

ONT is expected to trade at a discount, considering the US Recession fears and Continued Significant Losses Raise Concerns Over Path to Profitability. For conducting the valuation, the following peers have been considered Hikma Pharmaceuticals PLC (LSE: HIK), hVIVO PLC (LSE: HVO) and others.

Given its current trading levels, Reliance on Federal Funding Exposes Revenue to Policy Risk, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current Market Price of GBX 118.87 as of 14 April 2025 at 08:30 AM GMT+1. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 14 April 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.