Do I stay or do I go?29 Apr 2022 14:24
I decided not to post my musings on the week's Novacyt news until the dust had settled and I had the chance to watch the presentation again before reaching a personal conclusion.
The status of Novacyt as a potential overnight AIM multi-bagger has changed and a lot of people made a lot of money, missed out making a lot of money and many people are underwater as a result of buying in too high. I am a mixture of all three but currently am sitting on a substantial loss.
So what do we have today?
The DHSC issue has been a very unfortunate affair but I think the company have been honest and prompt in the various RNS's that have been released. I also believe that proper provision has been made for any result and whenever it happens. I also picked up very strongly from both James and David that they are going to spend some money on M&A. It may continue to affect sentiment but I no longer think it will get in the way of delivering on the strategy. They now a lot more than they are allowed to tell us and I don't think they would have been quite as bullish if they thought otherwise.
What do I think of the vision and the strategy? I like it. It is based on proper research and has several excellent planks. The aspiration to get to 10% reliance on Covid related revenue is commendable and I think very possible. It shows that some care and time have gone into it.
The revenue guidance of £35 to £45m for 2022 is still a pretty substantial business and the target of organic growth to £100m in five years is not that challenging when you look at the pipeline and the opportunities. It was also stressed that any M&A opportunities would be on top of that. Covid is also not quite done yet in my opinion, but they have sensibly discounted that.
It's no good comparing revenue now and in the future with the past two years. As was pointed out, Novacyt started this journey as a £10m RUO outfit and has arrived at this point with a massive lump of cash. I believe the new share incentive and the recent director share buys are a very good indicator of where the share price will be going over the next two years or longer.
In conclusion, its a share that I am happy to hold as I believe it will eventually deliver. So presumably do Bio. I was also impressed by both James and David in terms of their body language and confident delivery. Very different from when James was with GM and that interview David did when he hadn't got lot to say because he had not had time to get his head round where the business should go.
I understand some of the frustrations expressed on here in the past week and you have my sympathy if you have lost money that you can't really afford to because you can't wait. Arguably you should not have risked it in the first place but it is what it is. I remain confident that this will come good and in some style. Only my opinion and do your own thing of course.
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