Novacyt Group Share Price Forecast August 2021 – Time to Buy NCYT?
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Shares of Avon Protection (LSE: AVON) are in the red today, down by more than 1% to 1975p as of August 18th (19:05 UTC+1). AVON shares crashed last week with its share price declining by almost 30% after the company released its trading update. 2021 has been a rocky year for the shares as they have been down by 40% over the past 12 months. But is this dip in prices a buying opportunity for investors? Let’s find out.
Avon Protection – Technical Analysis
Avon Protection’s financial statement indicates that the market cap of the country is at £606.095 million with total assets worth £308.11 million. Avon Protection’s revenue for 2020 was at £168 million with a profit margin of 4.17% compared to revenue of £128.40 million in 2019.
Moving averages for Novacyt Group such as Exponential Moving Average (10)(316.0) and Simple Moving Average (10)(307.3), Exponential Moving Average (20)(319.2 and Simple Moving Average (20)(318) are pointing towards a buy action. On the other hand, oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(80.8), Williams Percent Range (14)(−1.4), Bull Bear Powe(56.0) and Ultimate Oscillator (7, 14, 28)(57.3) are all neutral.
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Recent Developments
Novacyt Group released a trading update yesterday where it reported an increase of revenue by 50% to reach £94.7 million, out of which £54 million came from private testing markets in the United Kingdom and overseas sales. Primerdesign, the company’s wholly-owned subsidiary secured a new contract for the supply of ‘PROmate’ Covid-19 tests to the NHS under the Public Health England (PHE) National Microbiology Framework. These tests can run on the company’s q32 and q16 PCR instrument platforms.
There was good and bad news in Novacyt Group’s trading update. Investors will be pleased to know that non-DHSC (NHS) sales increased by 20% to reach £54 million during the first half. Management expects reported sales for the full year to be £100 million, which would be a drop by 64% from 2020’s sales figures of £277 million. However, the dispute with the NHS is a worrying sign as £41 million worth of revenue for 2021 is under dispute and unpaid. Additionally, £24 million worth of invoices is still unpaid by the NHS from 2020.
Should You Buy NCYT Shares?
Investors must realise that most companies put positive spins on things when issuing trading updates. This may be the case with the Novacyt Group trading update where the management has excluded certain pieces of information. The company has not mentioned any non-Covid products as well as any information on the company’s plans as was the case with past trading updates. The trading update also made no mention of the company’s cash position at the end of the first half of 2021. While the company reported £91.8 million cash at the end of June 2020, there is a high possibility that the balance has declined sharply since then.
At the current price of around 363p, NCYT shares could be trading even times its forecast earnings based on the management guidance sales of £100 million for this year. While most investors may be tempted by this, they must consider a number of uncertainties. Firstly, e have no way of knowing whether the demand for Covid-19 testing will remain the same or decrease. Secondly, the ongoing dispute with the NHS could be costly for the company, resulting in loss of future sales. Lastly, there is no certainty on whether the company will acquire or develop non-covid related products in the future. Considering all of the reasons stated above, investors would be wise to stay away from NCYT shares for the time being.
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