A 20 per cent six-month share price rise and a valuation of 50 times forward earnings probably demanded more than just an 'in line' set of annual numbers. But the Abcam (ABC) share price slump on release of these results looked a tad overdone. After all, management still expects low, double-digit revenue growth over the medium term as the group outpaces strong global growth in the antibody market.
Abcam reported a like-for-like sales increase across all operating geographies in the year to June 2018, with a particularly strong performance in China. Adjusted earnings growth was characteristically strong at 27 per cent, although favourable foreign exchange movements were partly to thank. Ignore them and selling, general and administrative costs actually rose 14 per cent, as opposed to the reported 0.3 per cent decrease.
Future profits will likely be impacted by a delay in the completion of a new cloud computing system, as management 'phases' the software’s final launch to reduce risk to customers. This means adjusted cash profit (Ebitda) margins are expected to fall back to 36 per cent in the 2019 financial year (from 37.9 per cent in FY2018), while broker Panmure Gordon suggests consensus Ebitda forecasts could be trimmed by more than 10 per cent. Analysts there currently expect EPS of 32.1p, compared with 32.4p in 2018.
| ABCAM (ABC) | ||||
| ORD PRICE: | 1,273p | MARKET VALUE: | £2.61bn | |
| TOUCH: | 1,272-1,274p | 12-MONTH HIGH: | 1,588p | LOW: 949p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 171p* | NET CASH: | £90.2m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 128 | 43.6 | 17.1 | 7.8 |
| 2015 | 144 | 46.1 | 18.7 | 8.2 |
| 2016 | 172 | 45.4 | 18.6 | 8.9 |
| 2017 | 217 | 51.9 | 20.9 | 10.2 |
| 2018 | 233 | 69.1 | 30.5 | 12.0 |
| % change | +7 | +33 | +46 | +18 |
| Ex-div: | 8 Nov | |||
| Payment: | 23 Nov | |||
| *Includes intangible assets of £221m, or 108p a share | ||||
