Should we be concerned about Abcam?
UPDATE 10/4: Abcam shares have increased 6.4% since the release of this report. Further coverage in the sector can be found below.
Abcam (LON:ABC) shares are down 27 per cent since releasing a weaker than expected earnings report at the beginning of march, begging the question of what the future looks like for the company.
Interim results from Abcam were released on 4 March, with the company’s stock immediately down 11 per cent. At the time, shareholders posting to London Stock Exchange bulletin boards predicted a quick recovery, and ‘buy’ recommendations were made by analysts. However, a month down the line and no such recovery has been apparent for Abcam – shares are now down 27 per cent.
But should we be worried about Abcam’s future, or is the company set to turn things around?
The data that we have extracted today from CiteAb actually shows that Abcam’s share of the research antibody market has grown steadily and significantly over the last five years.
CiteAb data is based on the analysis of hundreds of thousands of publications which use research antibodies, so it gives us an unrivalled view of trends in the market.
China is a key growth market for research antibodies (see our post on this), and the data we’ve analysed today shows that Abcam is making good progress in improving its market share in China.
Expansion into growth markets is a priority for the company, with specific focus on China. Abcam recently opened a Shanghai office as part of a strategy to improve distribution, and further acquisitions could help accelerate growth in new countries.
The company has also been hit by a slower-than-expected release of research funding from Japan’s government stimulus package implemented in April 2013. Consequently, the underlying sales growth of 8.8 per cent seen during the period is lower than was originally anticipated by the company. However, when Japan is excluded, Abcam actually saw a respectable underlying growth of 14.7 per cent in Asia Pacific.
While Abcam has seen a poor performance of custom antibodies in the first half of its financial year, in contrast a real strength for the company is its range of rabbit monoclonal antibodies (RabMAbs®). This comes from the acquisition of biotech company Epitomics, and the data we’ve looked at today shows that Abcam now controls two thirds of the market for this rapidly growing class of antibodies.
In addition to its acquisitions and international growth, the company is also planning to make substantial investment in its digital marketing capabilities, and customer focus.
So overall, it would certainly seem too soon to write off Abcam. This is a company going through a period of significant change and making large investments, but all in areas where experts predict future growth and market development.
You can see Abcam’s full interim report here.
Further coverage from across the sector
Yahoo Finance – Abcam rises on upbeat data and boardroom buying
BullBearings – Abcam may be oversold suggests new data
IFA Magazine – Abcam rises on upbeat data and boardroom buying
