Abcam PLC (NASDAQ:ABCM) stock fell 6.05% (As on June 20, 1:26:23 AM UTC-4, Source: Google Finance) after BofA upgraded the company to Buy from Neutral with a $25 price target. This upgrade is likely due to the company’s strong financial performance and the sudden surge in strategic inquiries. The analyst has grown increasingly confident in the company’s ability to meet its “ambitious” mid-term targets.
Moreover, in executing the Abcam 2.0 strategy, with Alan as CEO and under the Board’s leadership, Abcam has broadened its focus beyond antibodies, unlocking massive opportunities in immunoassays, cellular and biochemical assays and cytokines, as well as focusing on its higher-margin in-house products. Revenue generated from in-house products grew by an average rate of 28% across 2021 and 2022 on a constant exchange rate basis and accounted for over 67% of overall Group revenue in 2022. The Company has also continued to lead and innovate in the core antibody space, gaining market share there as well. The nimbleness of Abcam 2.0 means the Company can now make decisions quickly to flex investment as market dynamics change.
In addition, Alan has spearheaded an ambitious growth plan, introduced in 2019, to double revenues and make investments into the critical infrastructure of the business. This included expanding and upgrading Abcam’s facilities to become more efficient, while removing operational constraints to improve capacity and allow the Company to scale up as demand for its products increases.
As the Board and management team continue to execute our strategy, 2023 so far has been a year of refining investments to build a leading and robust life sciences company that the company believes is capable of consistently driving double-digit revenue growth. Adjusted operating profit margins are expected to be greater than 30% in 2024, potentially meeting or exceeding pre-investment adjusted operating profit margins of 32%, with further gains to come as the Company continues to leverage the investments made. Further, in recent weeks, the Company announced incremental cost savings that the company expects to result in a reduction in annualized run rate operating expenses of more than £15 million by 2024. The implementation of these long-planned changes is already well progressed.
The Company recently reiterated its 2023 reported revenue guidance of approximately £420 million to £440 million, representing 15-20% constant exchange rate revenue growth, and provided guidance on FY2023 adjusted operating profit margins, which are expected to be 27-28%.