Abcam (ABC:AIM) is on track to hit its full year 10% sales growth target, delivering 11% growth in the six months to 31 December 2017.
The shares tick up 1.4% to £10.41 on the reassuring news. Abcam supplies protein research tools to life scientists, including antibodies and tissue imaging tools.
The company’s strong trading is particularly evident in China with sales growth of over 24% in its first half.
Abcam estimates growth in the wider market in China is between 12% and 15%, so it is growing at roughly twice the market rate.
Sales expectations are beating previous targets in key areas, including the sale of antibodies that are generated using synthetic genes and immunoassays. The latter is a tool for measuring the concentration of molecules in a solution.
ONE-OFF TAX CREDIT FROM US REFORM
Abcam is also expecting to benefit from the latest US tax reforms, which cut the corporate tax rate from 35% to 21%.
The company’s tax rate is anticipated to fall by low single digit percentage points from 30 June 2018 and it is also expected to enjoy a one-off tax credit of between £6m and £7m.
Investec analyst Andrew Whitney has hiked his earnings per share (EPS) forecasts by 2% to 31.4p. This reflects the expected benefit of tax reform and positive currency movements.
Abcam currently trades on an expensive-looking 33.3 times forecast 2018 EPS.
Whitney argues the life sciences specialist’s sales visibility from an established catalogue of products makes it worthy of a premium valuation.
He also flags a strong cash position of £84.8m and increasing free cash flow yield that is expected to rise from 2.4% to 2.7% in the year to 30 June.
