Biotech firm rallies on bid talk as impatient investors eye sale
SHARES in AIM-listed Abcam shot higher today amid speculation that the biotechnology company could be snapped up by a larger rival.
Yesterday its shares took a tumble as it said it expected revenues for the full year to come in slightly undercooked.
What really spooked was Abcam’s announcement that it is to produce a five-year plan in September, which will be an “opportunity to further grow the organisation organically through a programme of internally funded investments”.
Investors will not be able to review the plans in depth until presentations in November and there are fears that more investment in the business might damage earnings just at the time when its finance director Gavin Wood has quit to spend more time with his family.
Brokers said the firm, which sells antibodies to research institutions and drugs developers, was ripe for takeover from a bigger rival.
They added that investors might not have the appetite for another five-year growth plan given that it has only just completed its previous “invest-to-grow” strategy set out in 2014.
One broker said: “The big worry is that these internally funded growth plans start to hurt earnings. The company trades at a premium but that won’t put off a larger player.”
The shares increased by 6%, or 76p, to 1294p.
It comes ahead of GlaxoSmithKline’s results tomorrow, which are expected to be decent. Analysts said that under Emma Walmsley, who took over as chief executive two years ago, there had been a major shake-up as she has got rid of around 40% of its top management.
The shares were steady, hovering up 4p to 1658p.
Overall the FTSE 100 gained 55.98 points to 7571.07 as the City began preparations for life under a Boris Johnson Government. As a result a number of stocks, including estate agents, were down as if there is a hard Brexit under Johnson on October 31, London’s housing market is expected to be hardest hit.
Savills was off 2%, or 19.5p, to 881p. Funding Circle was also falling steeply as brokers said this stock in the Square Mile is viewed as a bet on Brexit.
One said: “If your view is that Brexit will be OK then backing a small business lender makes sense. If your view is the opposite then selling Funding Circle is logical.”
Funding Circle stock lost 3%, or 3.8p, to 117p.
Small-cap spotlight
POSH wellies seller Joules showed Asos and other retailers how to do it this session, turning in a 19.4% rise in pre-tax profits for the year to £15.5 million. The macs brand aimed at yummy mummies also said revenue came in 17.2% higher over the 52 weeks. The firm said it remains focused on growing in the US. Its shares were off 8p to 247p, which analysts put down to profit taking.