Shares digital

The online antibody specialist maintains its spectacular growth

by John Marshall

The shares of Abcam (ABC:AIM) have nearly doubled since Shares first recommended them two years ago (22 June ’06), and the antibody company has once again exceeded market expectations with earnings ahead by 42%.

The online specialist sells antibodies to universities, hospitals and drugs companies. The latter account for 25% of sales with universities and hospitals being by far the larger market.

The overall market is growing by some 10% a year, and the online market is growing even more quickly. Abcam’s spectacular growth has seen sales almost double in two years, and has been based on widening its product portfolio, which grew by just under 30% last year to 44,000 antibodies.

Historically, new products take several years to reach maturity. This means even if the group stopped adding to the catalogue it should enjoy good growth for some years.

However, with its strong cash position Abcam is well able to acquire more products on an exclusive basis. It is also adding some 600 new products each month. With only 4%-5% of the market Abcam believes there is scope to increase sales significantly.

Although only 10%-11% of sales are in sterling, the group will enjoy only a limited benefit from currency movements as some costs are denominated in dollars.

The company had discussions with a number of venture capitalists and quoted companies about a possible offer last year. These faltered on price.

Mike Mitchell of Oriel Securities, an independent broker with a price target of 550p, is forecasting earnings of 23p rising to 27p next year, placing the shares on a PE of 21.4 falling to 18.2.

Shares says: A unique company deserving its premium rating. Buy

The writer holds shares in this company