Shares in Novacyt (LON:NYCT) have continued to be a beacon of light for investors this week as the company announced an initial deal with Public Health England (PHE) for their COVID-19 testing kits.

Novacyt said its Primerdesign business unit had received a £1 million order for their coronavirus testing kits from the UK government who will test the kits in eight hospitals over four weeks.

The order from PHE order means Novacyt have received £3.7 million of orders for its testing kit, an amount it says usually represents eight months of it’s sales.

Novacyt shares

The AIM-listed pharmaceutical company starting making announcements about the development of their testing kits at the end of January, when shares were trading at just 20p.

Shares have since rocketed and reached intraday highs above 215p, before falling back. However, shares have enjoyed renewed buying pressure this week sending shares back over 140p for a period.

Test, test, test

There is a consensus the wider testing of coronavirus is key to bringing the spread under control.

“We have a simple message for all countries Test, test, test. Test every suspected case,” said Dr Tedros Adhanom Ghebreyesus, Director General of the World Health Organisation.

He continued “if they test positive, isolate them and find out who they have been in contact with two days before they developed symptoms and test those people, too.”

There have been two main problems with this thus far, firstly government were slow to increase the number of tests and the second, and most relevant to Novacyt, is the lack of available tests.

It is impossible to make any forecasts of how many people will need to be tested globally or in the UK and with some officials predicting many multiples more have COVID-19 than current records, the potential demand is significant.

While this has investors excited, some analysts are cautioning that Novacyt are not alone in the pursuit of testing kit development.

“The race for the testing kits is far hotter than the vaccines at the moment, largely due to the testing time for a vaccine. I would, however, err on the side of caution as there are plenty of other companies in the race for testing kits but the recent news on Novacyt’s PHE deal is a big a positive, as is the WHO message of “test test test,” said John Woolfitt, Director of Trading at Atlantic Capital Markets.

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