After being downgraded just three months ago by equity research organisation Berenberg, Abcam has been put back onto the company’s buy list following the bank having a change of heart over the life science supplier.
We spoke to Berenberg analyst Charles Weston, who explained: “We downgraded our rating on Abcam three months ago based on valuation, but we felt at the time we were missing some insight into the company that was holding back a more bullish view.
“We have now found it in “Abcam Inside”, which we estimate is already worth GBp500 per share. Having also analysed updated proprietary market data [Editor’s note: this is CiteAb data], spent two days with the company meeting new investors, and spoken to industry insiders in both the research antibody and diagnostic immunoassay markets, we have now regained our mojo, and upgrade Abcam back to Buy, with a new GBp1,640 price target.”
Abcam Inside is the name for Abcam’s work with diagnostic and therapeutic companies, where it provides them with commercial rights to specific antibodies in return for a small upfront fee and low to mid-single-digit royalties on sales. Its team of 30 people deliver 150-plus projects per year to its customers.
In developing the report, Charles also worked with CiteAb founder Andrew Chalmers and included data from CiteAb to help the company rethink its recommendation.
The report states: “We have taken the opportunity to revisit academic citation trends, analysed from the proprietary CiteAb database, and these show that Abcam has accelerated its overall market share gains. China, where Abcam is stretching its leadership position, continues to be a key driver of growth, and the company is also gaining share from the one main competitor in rabbit monoclonal antibodies, the fastest growth category in research antibodies overall. Abcam’s recent trading statement confirms that it is growing around twice the market rate.”
Dr Chalmers said: “This report comes at a time when Abcam is forecasting double-digit growth in its full-year results following strong income growth across all of its product categories. Our data is consistent with this, suggesting that the company is gaining share in multiple markets.”
Shortly after Berenberg’s announcement, Abcam shares were up 8%.
– Katrina and the CiteAb team