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 3,600.00

• Promising Outlook: BVXP reported a rise in revenue despite the challenging operating environment. The Group also maintained a lucrative dividend policy, which reflects the management’s confidence in the business outlook. The lockdown easing shall support the revival of vitamin D antibody sales.
• Strong Balance Sheet to Pursue Growth Opportunities: BVXP continued to report strong cash balance despite investing in research projects and developing pipeline for creating incremental value for its shareholders.
• Strong Profitability Margins: 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, BVXP’s stock price is trading around the lower Bollinger band, reflecting a bullish price momentum.

Key Risks

• 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. Therefore, the Company witnessed a significantly lower volumes in pandemic affected areas.
• Macroeconomic Risk: The unfavorable exchange rates, with rising macroeconomic uncertainties pertinent to rising US Treasury Yield and likelihood of increase in interest rates can impact the financial performance.

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).
• Special Dividend: The Group also announced a special dividend of 38 pence per share in FY21.

One Year Share Price Chart

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

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

Conclusion 

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. The sales related to troponin antibodies grew significantly in FY21 and shall continue the momentum. The stock made a 52-week High and Low of GBX 4,549.24 and GBX 3,565.00, respectively.

Based on the resilient financial performance, robust profitability margins, dividend increase, we have given a “Speculative Buy” stance on Bioventix PLC at the current market price of GBX 3,600.00 (as on 25 October 2021 at 08:07 AM GMT+1), with lower-double digit upside potential based on 30.87x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*All forecasted figures and Industry Information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*The reference data in this report has been partly sourced 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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