 was up by over 10%, one of the highest risers on the AIM.){kind=link}
Novacyt Share Price
On Monday morning the Novacyt share price (LON:NCYT) was up by over 10%, one of the highest risers on the AIM. Having continued where it left off last week, Novacyt could soon get back to 500p. This is having fallen from 695p earlier this month following a dispute with the UK Department of Health and Social Care (DHSC). It was a further come down from 25 January when Novacyt shares were at 1,190p after massive growth throughout 2020. With signs of further gains over the past week, investors will be paying attention to what could prove to be a low valued stock.
End of NHS Contract
Novacyt said a couple of weeks ago that it was concerned about its revenues due to a dispute with the UK Department of Health and Social Care (DHSC) over the termination of the contract between the pair. The firm has said that its revenues and profit levels for 2021 could be lower than market expectations without the contract.
The situation is compounded by Novacyt’s lack of clarity regarding sales as a result of the “ever-changing nature of the COVID-19 pandemic and diagnostic testing demands”. A high portion of the company’s sales, which has been driving up the price of the company’s share price, came from the contract. Novacyt delivered revenue for the first quarter of 2021 of GBP72.6 million, with 50% of this attributable to sales to the DHSC.
A statement released by the company said: “Whilst the directors are confident new contract wins will continue as Novacyt expands international sales and into private sector testing, they believe revenue and profit for 2021 may be lower than current market expectations due to the absence of the DHSC contract extension.” The AIM-listed company also said “it has strong grounds to assert its contractual rights” by taking legal action as the DHSC said it would not extend a supply contract for Covid-19 tests.
Not All Bad
However, it is not all doom and gloom for Novacyt, as the company is set to launch several new rapid testing kits for variants of the coronavirus later this year. The company has also accumulated money on its balance sheet to the amount of £91.8m. While its value has dramatically fallen during 2021, there are many unknowns factors, which makes the Novacyt share price a difficult one to assess.