Novacyt is in bad shape on the stock market. The shares of the SME, which derives most of its income from the sale of Covid tests, plunged more than 20% on the stock market on Tuesday, lining up a sixteenth session of decline in a row. Their value has again been halved in less than a month after already a 55% plunge in 2021, which is however to be put into perspective in view of the exceptional stock market episode that was 2020.
The Parisian company is the one which, par excellence, has taken advantage of the health crisis. As one of the first to have developed PCR tests that are stable at room temperature and capable of rapidly detecting the DNA of the new coronavirus, its shares jumped 5,700% in 2020, at the height of the health crisis. The Covid has been a boon for the SME in difficulty, as evidenced by its stock market price, which fell from a historic low point of 6 cents in October 2019 to more than 2 euros in mid-February, before reaching a record at almost 14 euros in October 2020. The shareholders who had participated in the IPO in 2012, at more than 8 euros, finally got their money’s worth.
But today, Novacyt shares are back on the threshold of 2 euros. The company, which has its molecular testing division based in Southampton, UK, published a very sharp drop in 2021 sales this morning, even though it is in line with management’s expectations. It came out at 95.8 million pounds sterling, well below the 277.2 million achieved in 2020 once this figure is reduced by the 40.8 million pounds linked to the disputed contract with the British Ministry of Health, which was its main customer.
The United Kingdom still represented 45% of Novacyt’s sales last year, compared to 79% in 2020. The country remains the company’s leading market, just as Covid remains by far its first indication. Coronavirus screening tests accounted for 86% of annual sales (95% in 2020) for the company, which also markets agri-food diagnostics and blood grouping products.
Non-Covid products will be released at the end of the year
Full financial results will be released in April. Already, Novacyt indicates that the gross margin before exceptional items should be around 70%. As for Ebitda (gross operating profit), also restated for exceptional items, it “expected to be over £36m [contre 176,1 millions en 2020], i.e. a margin of over 37%, in line with management forecasts, which were counting on around 40%. »
At the end of December, cash stood at £101.8 million, which covers three-quarters of the market valuation.
For the new fiscal year, the context makes the imposed exercise of forecasts perilous. Management explains that “As observed over the past two years, and demonstrated over the past two months, the course of this pandemic is unpredictable and, therefore, so is the predictability of demand for testing. » The board of directors, however, ventures to communicate some figures: it expects sales of Covid tests to be reduced “about 50%” in 2022, compared to 2021, “which will be partially offset by new non-Covid products that will begin shipping in Q4 2022.”
The fall on the stock market of a company like Novacyt, which has put all its eggs in one basket, is undoubtedly brutal for it and its employees, but it is also indicative of an improving health situation. Could the end of the tunnel be near? This is at least what the profit releases on Sartorius Stedim or Eurofins Scientific suggest. The supplier of laboratory equipment and the diversified diagnostician, which entered the Cac 40 in September, are still today among the largest declines in the SRD.