OptiBiotix Health PLC

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

Investment Rationale – SELL at GBX 53.00

• The resurgence in the Delta variant of coronavirus can limit the Company’s ability to formulate, innovate and launch new products.
• The Company has a history of losses and has shown inconsistent profitability in the past few years. Since FY17, its gross margin also remained lower against the industry median of 71%.
• From a technical standpoint, 14-day RSI (~64.21) indicates an overbought signal while the stock price has surpassed the upper standard deviation of the Bollinger Bands.
• OPTI’s stock price has merely generated ~3.88% of return in the past year, showing significant underperformance against the benchmark, FTSE AIM All-Share index.

Key Risks

• The Company has not reported profit yet, and thus, can face liquidity risk.
• The Covid-19 mayhem and travel restrictions can significantly impact the supply chain, and inventory management.
• The macroeconomic instabilities can cause credit risk and delay the launch of new products.

Recent News

Agreement Extension: On 10 August 2021, OptiBiotix announced the extension of territories of its original agreement with Seed Health Inc, commercialization of products containing LPLDL®.

Trading and Commercial Update (as on 05 August 2021)

• The total invoiced sales from LPLDL® and SlimBiome®, jumped 44.3% year-on-year to £1.074 million in H1 FY21, which exceeded the management’s expectations.
• Similarly, sales in ProBiotix were £536,998 in H1 FY21, representing 57.7% increase on H1 FY20.
• The Company also realized £900,936 from the disposal of shares in SkinBioTherapeutics PLC.

One Year Share Price Chart

 (Data Source: REFINITIV, analysis done by Kalkine Group)

Conclusion

OPTI continued to report operational losses as the Covid-19 has presented significant challenges, which has diverted the government, commercial and medical attention from the markets. Moreover, operating difficulties can cap its growth as the Company could fail to capitalize on its pipeline and new product lines. Moreover, the global recession and rising input prices can also cause market volatilities. Therefore, it is prudent to liquidate the position at the current levels. The stock made a 52-week high and low of GBX 69.00 and GBX 45.00, respectively.

Based on the operational losses, overstretched technical stance, macroeconomic instabilities, we have given a “SELL” recommendation on OptiBiotix Health PLC at the closing price of GBX 53.00 (as on 11 August 2021).

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

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