Omega Diagnostics Group PLC

Omega Diagnostics Group PLC (LON: ODX) is an FTSE AIM All-Share index listed medical diagnostics company focused on infectious diseases and food intolerance.

Investment Rationale – SELL at GBX 24.25

• Weak Profitability: The net loss and EBITDA loss had widened during H1 FY22 when compared with the prior-year levels.
• Profit-Booking Opportunity: The Company’s stock price had almost reached the Resistance 2 levels provided in the last coverage. Thus, it would be a decent opportunity for the investors to book profit at the current levels.
• Unfavourable Technical Indicator: From a technical standpoint, the 20-days exponential moving average of GBX 27.29 reflects a bearish price momentum.
• Reduced Cash Balance: ODX’s cash balance got reduced from £7.0 million at the end of H1 FY21 to £4.7 million as of 30 September 2021.

Key Risks

• UK GDP: The UK GDP grew by around 1.1% during Q3 FY21, less than the estimated figure of 1.3%.
• Record Covid-19 Cases: The daily COVID cases in the UK breached 1,00,000 mark for the first time on 22 December 2021. Thus, it would result in increased restrictions over the period.

H1 FY22 Financial Highlights (for the six months ended 30 September 2021, as on 25 November 2021)

 (Source: Company Website)

• Top-line Growth: During H1 FY22, revenue jumped 81% year-on-year to £5.73 million (H1 FY21: £3.16 million).
• Profitability: ODX reported a statutory loss of a negative £2.75 million during H1 FY22.

One Year Share Price Chart

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

Conclusion 

Considering the penny nature of the stock with small market capitalization, it can be exposed to market volatilities. Moreover, the Company has a history of operating losses, and thus, it can also face liquidity issues. Furthermore, the Company’s stock price had almost reached the resistance levels provided in the last coverage. Therefore, it would be prudent for the clients to book profit at the current levels on this Company. The stock made a 52-week High and Low of GBX 117.98 and GBX 20.00, respectively.

Based on the reduced cash balance, weak profitability, and penny nature of the stock, we have given a “SELL” recommendation on Omega Diagnostics Group PLC at the closing price of GBX 24.25 (as on 22 December 2021).  

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

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.