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The ‘Amazon.com of antibodies’, Abcam has issued first-half results well ahead of forecasts and its cash-generating model is set to accelerate thanks to new production facilities.

The Cambridge-based venture manufactures antibodies, an essential tool used in the biotech and life science research industries, and sells them as well as third-party-made ones on its online sales platform. Customers in this growing market are the world’s research institutes, Big Pharma companies and university laboratories.

Since floating on AIM in 2005, growth has been steady and in the six months to last December sales ascended 38% to £15.3m and underlying pre-tax profits by 19% to £3m. Cash generation hit £4.2m and a dividend hike of 30% to 1.04p per share was proposed.

Of its current catalogue, 6% of the products are manufactured in-house, providing 16% of revenues. Understandably, chief executive Jonathan Milner wants to increase the amount of antibodies Abcam manufactures ‘to a third or half of all sales’ and to this end a £5m new high-throughput facility is already operational.

Abcam’s attractions saw it in takeover discussions with a number of parties for much of last year, before 26% shareholder Milner and Co eventually decided they could extract more value on their current course. This path, forecasts house broker Numis, should see it generate £33.9m sales for the full year, with profits of £6.4m and earnings per share of 12.7p, rising to £42m, £9.1m and 18p for 2009.

The shares look pricey at their current rating of near 30 times full year earnings, but the company is growing fast, pays a small dividend and has defensive qualities. Buy.

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