- First-half revenue beat
- Outlook confirmed
- Strong growth across the board
Next generation DNA sequencing company Oxford Nanopore (ONT) jumped as much as 20% to a new 12-month high of 176.3p after reporting first-half revenues above consensus market expectations and reaffirming its full-year outlook.
For the uninitiated, Oxford Nanopore has developed a new generation of nanopore-based sensing technology allowing real-time analysis of DNA (deoxyribonucleic acid), a chemical which carries each person’s unique genetic code.
The shares are up almost 50% over the last year compared with a 4% advance in the FTSE 250 mid-cap index.
STRONG HALF
For the six months to 30 June, the company expects to report a 28% increase in revenue to £105 million at constant currencies, with strong growth in the firm’s PromethION product range which notched-up approximately 59% year-on-year growth.
Analysts at Berenberg noted the outturn is roughly 5% above the company-complied consensus forecast revenue of £100.3 million.
Oxford Nanopore said strong momentum across the business supports maintaining full-year guidance. This calls for revenue growth of between 20% and 23% and gross margins of around 59%.
As well as de-risking delivery of full-year expectations, Berenberg believes this should allay investor concerns regarding the macroeconomic uncertainties in Oxford Nanopore’s end markets, particularly in the US.
The company noted that despite ongoing uncertainty in the US research environment, revenue in the Americas grew by 17% in constant currencies driven by increasing demand in applied markets.
THE PATH TO PROFITABILITY
Disciplined cost management and gross profit growth helped the company deliver a sequential reduction in its adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) loss, showing continued progress towards profitability.
Oxford Nanopore is targeting to become cash flow positive by 2028, and finished the half with net cash, cash equivalents and liquid investments of £337 million.
The company noted an improvement in cash conversion following the adoption of a new pricing model in March, as well as a higher proportion of customer capital expenditure purchases, which improved working capital dynamics.
