Prospective Abcam (ABC) investors face a perennial dilemma: does a decade of double-digit like-for-like revenue growth justify a sky-high valuation, or is a forward price-to-earnings ratio of 38 times simply too much for new investors to stomach?
For most of the 13 years that Abcam has traded on Aim, investors would have fared well with the former option. Meteoric share price movement at the antibody specialist has been supported by strong profit growth and an impressive ability to generate cash. And 2018 looks like it's going to be more of the same. In the first six months of its financial year ending in June 2018, the group reported an 11.2 per cent increase in revenues at constant currency, characteristically solid gross margins, and adjusted EPS up 20 per cent. Moreover, the group has upped its full-year revenue growth forecast by 1 percentage point thanks to the solid first-half performance and the group’s new partnership with Swiss pharmaceutical giant Roche. Brokers at Numis are confident pre-tax profits and EPS will reach £83m and 33p, respectively (from £65m and 26p in 2017).
| ABCAM (ABC) | ||||
| ORD PRICE: | 1,239p | MARKET VALUE: | £2.54bn | |
| TOUCH: | 1,235-1,239p | 12-MONTH HIGH: | 1,290p | LOW: 799p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 46 | |
| NET ASSET VALUE: | 157p* | NET CASH: | £91.6m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 103 | 25.1 | 9.8 | 2.83 |
| 2017 | 113 | 32.8 | 15.8 | 3.42 |
| % change | +10 | +31 | +61 | +21 |
| Ex-div: | 15 Mar | |||
| Payment: | 12 Apr | |||
| *Includes intangible assets of £187m, or 91p a share | ||||
