Bioventix PLC

Bioventix PLC (LON: BVXP) is an FTSE AIM All-Share listed entity that develops and commercializes high-affinity monoclonal antibodies for its application in clinical diagnostics.

Rationale for Valuation – SPECULATIVE BUY at GBX 3,040.00

• Stable Platform for Growth: BVXP has a resilient business model, and thus, it continued to follow its established dividend policy. The continued success of the core antibody business and vitamin D antibody brought further progress in FY21. Adjacently, the Company is optimistic about the troponin revenues.
• Top-line Growth: The sales related to troponin antibodies grew significantly in FY21, and thus, BVXP reported an increase in revenue despite the challenging operating environment.
• Stronger Profitability: Since FY17, BVXP has maintained excellent profitability margins as gross margin, operating margin and the net margin remained above 92%, 74%, and 62%, respectively. All the margins are significantly higher than the industry median.
• Technical Indicator: From a technical standpoint, the momentum oscillator 14-day RSI (~32.33) confirms the oversold position, while the price is hovering close to the lower Bollinger Band.

Key Risks

• Subdued Macroeconomic Conditions: The dented risk appetite of investors amid record inflation rate in the UK, Ukraine war crisis, expectations for further interest rates hikes, and uncertain demand outlook, can hurt the overstretched position of blue-chip stocks.
• Pandemic Impact: The resurgence in Covid-19 cases in the UK can be concerning since the diagnostic pathways in hospitals and clinics have been impacted with the Covid-19 pandemic.

Financial Highlights (for the year ended 30 June 2021, as on 18 October 2021)

 (Source: Company Website)

• Top-line Growth: During FY21, revenue surged 6% year-on-year to £10.93 million (FY20: £10.31 million).
• Profit Declined Moderately: The profit before tax slightly fell by 1% to £8.12 million (FY20: £8.23 million).

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

*Peers: Advanced Medical Solutions Group PLC, Craneware PLC, LivaNova PLC, STERIS plc, and Inspecs Group PLC.

*All selected peers are LSE listed Companies from the Health Care sector.  

Conclusion 

BVXP continued to report strong cash balance despite investing in research projects and developing pipeline for creating incremental value for its shareholders. It also announced a special dividend of 38 pence per share in FY21, which reflects the management’s confidence in the business outlook. The stock made a 52-week High and Low of GBX 4,540.00 and GBX 3,000.00, respectively.

Based on the resilient financial performance, robust profitability margins, dividend increase, we have given a “SPECULATIVE BUY” stance on Bioventix PLC at closing market price of GBX 3,040.00 (as on 16 February 2022), with lower-double digit upside potential based on 27.56x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

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 scenarios. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

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