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@VanV
Hmmm... Interesting comments. Noted
Please note: My position has not changed. I have always been both LONG and Bullish and i retain that position.
I also retain my price targets
SH are fickle but fundamentals will ultimate out here imo.
GLA
PART TWO
As such I imagine from 2024 onwards bottom-line EBITDA in the region of 200m but likely will be higher with longer term contract deals on an ongoing basis. By this time, we will have an established PE ratio (Not Cash rating) as they will be established as a long-term Diagnostics player not a short term covid play as current. The outlook further proven.
Now as at today Numis has valued Novacyt at between 13.65 per share and 35.00 per share blue sky on the current conservative data.
To reach my £ 54 SP target I need to see a valuation of just over circa 3.5bn which is what I am working on and consider this more than possible. Some Visitors will scoff at this, but I do not care, the BOD have made it clear they are working to and intend to become a MID cap player, they always estimate on the side of caution and I consider they will not only achieve this but will become firmly established in the £3bn to £ 4bn range minimum.
So, I am looking for a PE Ration of about x 18 based on my forward earning calculation from 2024 which I think is VERY achievable.
Meanwhile I can illustrate numerous peer examples that carry a significantly higher PE ratio so the reality is that we could deliver less long-term earnings at a higher PE ratio to secure the same value.
The key to unlocking our true value is PROOF of long-term sustainability and this is now unfolding before our very eyes.
So, onto the take over risk.
GSK have always been touted as the most likely suitor, in its desire to keep pace with J and J with their profitable diagnostics division so Novacyt are an obvious buy.
Equally AZK is working in partnership with Novacyt in numerous ways and the addition of Novacyt would strengthen their business also especially in relation to Vaccine development.
With our market cap so low in relation to these giants and our potential revenues I am see a swift take out at minimum of £ 2 bn as highly likely which is about £ 28
70 million shares in issue and being predominantly private investor owned is why its rocky but II now controlling about 12% I think at last check.
Either way, I see significant upside from where we are today.
GLA
OK I am prepared to share my thoughts here on Share Price valuation irrespective of being shot down by certain visitors and I remain very bullish, so here goes:
PART ONE
As I see it, they are building a multi sector international diagnostics juggernaut with an established network of sellers and resellers into 150 regions. In addition, they are leading the way on whole genome sequencing which supports vaccine development and embedded into the UK NHS where diagnostics which has previously been overlooked will now and in the future continue to grow in all health sectors. This is a high growth quality business.
Their technology is both versatile and they remain ahead of the curve continuing to innovate.
Currently we sit materially undervalued at about half of both broker estimates: -
Numis Security
Revenues 317m EBITDA 201m CASH at Bank 279m Fair Value SP £ 13.65
S P Angel
Revenues 271m EBITDA 173m CASH at Bank 278m Fair Value £ 14.33
To value the company fairly you need to price in its longer-term potential. Currently both broker estimates have the outlook for 2024 and beyond at around the 145m Revenue mark and 65m EBITDA with 465m cash at bank and the market remains pessimistic to outlook still thinking they are a one trick pony and a short life business. Hence the cash rating.
However, I do not share this view, and this is because I believe that some kind of forward arrangement with DHSC is highly likely BUT moreover now we are positioned stateside I believe that USA sales will be significantly higher than forecast and we will imbed further into this market. I also believe relations with AZK and GSK are also strengthening, and partnership deals likely.
The move forward with whole genome sequencing is VITAL to future vaccine development. You cannot have an effective vaccine without mapping the effects of variants and this further endorses their market strength and value.
In addition, I do not believe that the cash pile will just sit there. The BOD is highly experienced regarding scale having done it before and strategic acquisitions will be made for sure to diversify diagnostics. We are seeing white papers in Maternity embryo testing work, Cancer Tumours and even work in Autism spectrum so their products will be far reaching.
From most sectors I have worked with a 20% ROI from acquisitions is what I would expect as norm. Now Novacyt could get it wrong and buy a perpetual lemon or lemons then again, they may buy something off the chart. BUT I see a series of acquisitions being made which will balance risk ratio for them and as such in very rough terms see an absolute minimum of 4 x 20m bottom line = £80m to maybe £ 100m bottom line creation from acquisitions.