Bioventix (OFEX:BVXP) specialises in the development and commercial supply of high affinity monoclonal sheep antibodies for applications in in vitro clinical diagnostics. Its client base includes the top five global diagnostic companies.
Bioventix is not, however, a typical blue-sky biotech company. It is profitable, cash generative, debt-free and dividend paying.
Highlights
• Market Cap. £21.4m
• Revenues have quintupled at a CAGR of 13.2% over the last six years;
• Pre-tax profits have increased at a CAGR of 20.3% over the same period;
• EPS has increased 134% since 2009;
• Dividend yield of 3.2%;
• Operating margins hit 67% in 2013 and are set to go higher in 2014;
• Return on Equity in 2013 was 36%;
• Return on Total Assets (excluding the surplus cash on the balance sheet) is a staggering 94%;
At the current offer price of 450p Bioventix trades at only around 12.5x my 2014 EPS estimate of 35p. This represents an earnings yield of 8.0% which historically has been backed almost 90% by free cash flow.
The annuity style nature of the Company’s revenues (and the development of new anti-bodies) should see EPS grow at between 15% and 20% p.a. for the foreseeable future (at least until 2020 and in all probability well beyond).
What are the catalysts for the shares to trade higher in 2014?
First, the Company is planning a move to AIM from ISDX in the current year. This should mean a more active market in the Company’s shares and a higher valuation.
Second, the Company is holding a big cash buffer. It is actively contemplating a special dividend or raising the pay-out ratio from the current 50%.
Third, House Broker finnCap is assuming only a modest increase of 3.2% in EPS to 32.2p in 2014. I believe EPS will come in much higher at around 35p once adjusted for the costs of the planned AIM listing. finnCap has EPS rising to 37.7p in 2015 but I believe EPS will be higher at 40p or more.
Fourth, despite its cautious EPS forecast, finnCap has a target price of 600p. See the link below to their research.
History
Bioventix was previously an antibody technology laboratory owned by KS Biomedix. In September 2003,…
Do you have any idea of when the planned move to AIM will take place?
Cheers
Mike
