RE: Short Term Target £541 Feb 2021 03:26
I am now going to explain why i'm absolutely confident the share price of this business will go north of £ 54 which is my short term target.
As it stands its going to take a significant time to vaccinate the entire world. This is not just the UK we are talking about.
Novacyt currently supply 130 countries around the world with an ever increasing network of re-sellers and partners. meanwhile there are numerous variants of the virus hence, i genuinely believe that testing will be here for good.
Now granted testing volume should decline in the very long term ultimately but not for some time!. most analysts are now working on 2028 and some think other different virus may come along and we are going to need to maintain our testing infrastructure. Testing and vaccinating every year against different variants.
In fact, if you look at the Numis projections for Novacyt just assuming NO government contracts, No acquisitions that could add value and No further revenue streams, painting a totally pessimistic picture, you still find that by the end of 2023 they would still be doing 178m of Revenue and 88 m of profits. That's a worse case scenario!!!!!
I believe that they will likely make acquisitions and they will roll out additional product revenue lines and i wouldn't be surprised if they did land a DSHC or equivalent sized large order on top of this but i digress;
Now as its stands they have no PE rating, its on a cash rating. If you applied a PE rating as it currently stands it would be less than X3 after costs. If you look at the diagnostics sector there are many at significant multiples but lets just take a low average of x16 which is typical. If you applied that to the worse case scenario results in 2023 that alone would give us about 1.5bn value or just over £21 a share BUT Novacyt as it continues to prove it delivers should attract an even higher PE Ratio in my opinion.
But Novacyt are delivering way more revenues than the worse case position, in fact the 2021 year will likely come in higher than the last 12 months! another 300m Revenue and the cash pile is just increasing by the month as they grow and further expand.
Ultimately, cream always rises to the top and as far as i'm concerned
Now, i'm bullish about this stock as everyone knows and i see exactly what they are building at Novacyt. This is a business being well and truly positioned for mid market status and i know they will get there. This is why I'm confident of my exceeding my target values.
GLA what ever your call but this is a screaming Red Hot Buy at the current level and i continue to add.
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