Don’t throw the baby out with the bathwater. Despite reporting record H1 results today with adjusted EBITDA coming in at £11.2m on sales up 252% to £37.3m. Shares in laboratory services & medical diagnostics firm SourceBio International Plc (SBI strangly languish 15% below its Oct’20 IPO price of 162p.
Sure the government’s recent decision to scrap PCR testing from 1st November for fully vaccinated outbound travellers to low-risk countries on Day 2 & 8 will impact covid volumes (ie c. 70% lower than Q3'21).
Yet elsewhere, the other 3 divisions (ie healthcare diagnostics, genomic sequencing & stability storage) should offset some of the slack (see pathology screening chart), given the UK’s successful vaccination rollout, alongside the NHS’ urgent need to tackle mushrooming (5.6m) patient waiting lists.
Elsewhere, #SBI has squirrelled away around £20m of net cash (27p/share), and is reviewing an exciting pipeline of value-creating M&A deals.
Consequently, I believe the stock offers compelling upside potential for long term investors. A point not lost on executive Chairman Jay LeCoque. Nor 29.2% shareholder Christopher Mills of Harwood Capital Management Ltd – who is one of the UK’s finest life science fund managers.
Plus regardless of the anticipated reduction in PCR volumes, the Board still expects 2021 revenues to climb approx 70% on 2020 levels – equivalent to c. £86m (£50.7m LY).