A July trading update from Abcam (ABC) had already teased its next expansion phase, garnering an unenthusiastic response from investors. With more details unveiled alongside full-year results – as well as a £13m hit to statutory earnings from previous software development costs – the antibody specialist saw its shares tumble 9 per cent on the day.
The adjusted cash profit margin was already squeezed by 2.3 percentage points in 2019 thanks to the now completed “invest-to-grow” strategy. But in seeking to almost double revenue to between £450m and £500m over the next five years, the margin is expected to fall further from 35.6 per cent to 32-35 per cent in 2020, following up to £50m in capital expenditure on items including a revamped IT system and product development. This is part of an overall planned investment of £175m-£225m to 2024, targeting further antibody innovation and expansion into adjacent life science markets.
Catalogue sales have strengthened, with a 10 per cent constant-currency increase driven by a jump in demand for recombinant antibodies and immunoassay products. But custom products and licensing was flat as a lower intake from custom projects offset increased revenue from higher-margin licences, royalties and supply agreements.
House broker Numis has downgraded its forecasts, and now expects adjusted pre-tax profit of £78m and EPS of 30.8p in 2020, rising to £89m and 35.1p in 2021.
| ABCAM (ABC) | ||||
| ORD PRICE: | 1,118p | MARKET VALUE: | £2.3bn | |
| TOUCH: | 1,116-1,118p | 12-MONTH HIGH: | 1,523p | LOW: 1,006p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 51 | |
| NET ASSET VALUE: | 187p* | NET CASH: | £87.1m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2019 | 260 | 56.4 | 22.0 | 12.1 |
| % change | +11 | -18 | -28 | +1 |
| Ex-div: | 07 Nov | |||
| Payment: | 29 Nov | |||
| *Includes intangible assets of £228m, or 111p a share | ||||
