Abcam PLC

Abcam PLC (LON: ABC) is an FTSE AIM UK 50 Index listed multinational Life Sciences Company, which produces and markets protein research agents and tools to assist life science researchers and clinical communities.

On 12 September 2022, ABC expects to release its report for the 6-month period ended 30 June 2022.

Investment Rationale – SELL at GBX 1,306.00

• Profit Booking: ABC’s stock price has soared over 10% in the past month, and it is presenting a profit booking opportunity.
• Weaker Balance Sheet: ABC turned into net debt position of £24.1 million at the end of FY21 from net cash of £211.9 million at the end of FY20.
• Technical Standpoint: ABC’s stock price is hovering around the upper Bollinger Band, reflecting an overbought scenario.
• Overvalued Multiples: On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book multiples are overvalued against the Health Care sector.
• Macroeconomic Uncertainties: The market sentiments can remain weak in the short-term due to 40-year high inflation, subdued factory output, geopolitical tensions, and political risks. Moreover, the Bank of England (BoE) has increased the interest rates by an aggressive 50 basis points to 1.75%. BoE has also given warning for recession this year.

Share Price Chart  

 (Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Conclusion

Based on the notional gains, macroeconomic challenges, coupled with the unfavorable valuation conducted above, a "SELL" recommendation on Abcam PLC has been given at the current market price of GBX 1,306.00 (as of 26 August 2022, at 01:06 PM 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 level is 26 August 2022. 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 scenarios.

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.’

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