Bioventix benefits from antibody demand

Monoclonal antibodies are lab-made proteins that bind themselves to specific targets in the human body. They can be used in the detection and treatment of cancer, as well as a number of other diseases. Aim-traded Bioventix (BVXP) produces these antibodies in sheep and supplies them to customers in the field of clinical diagnostics.

This might sound like a niche line of business, but these substances potentially have a major role to play in helping doctors more readily identify common illnesses. For instance, the company has supplied antibodies to researchers at the University of Gothenburg, who are in turn developing a blood test for the early detection of Alzheimer’s disease.

Revenue at Bioventix continued to tick up in the six months to the end of December 2023, thanks in large part to increased product sales and associated royalties from customers in China. However, the company said that sales of its troponin antibodies – which are used in heart disease tests – were a little below its expectations. “Whilst this has inhibited growth short term, there is no obvious reason to doubt the previous forecasts for future growth of troponin related revenues in the longer term,” said chief executive Peter Harrison in a statement. 

While the group’s pre-tax profit was up by a sizeable 16 per cent, its profit after tax figure increased by just 8 per cent due to changes in the UK’s corporation tax regime. Investors seemed somewhat underwhelmed by the company’s interim update, with the shares falling by around 1.5 per cent in the hours after its release. 

That said, the stock is still up nearly 20 per cent across the past six months, and FactSet broker consensus puts its full-year price/earnings multiple at more than 27 times. The shares are firmly out of bargain territory now, so we move to hold.

Last IC view: Buy, 3,700p, 31 October 2023