Berenberg changes mind on Abcam, reinstating 'buy' rating

Analysts at Berenberg on Tuesday upgraded their rating for shares of Abcam from ‘Hold’ to ‘Buy’ after having downgraded shares of the antibodies supplier just three months ago.

Raising the target price for shares in Abcam to 1,640p, the German broker's analysts justified their change of heart by explaining that they had been lacking sufficient insight before the emergence of the new 'Abcam inside' business line.

The Berenberg analysts said: "Having also analysed updated proprietary market data, spent two days with the company meeting new investors, and spoken to industry insiders in both the research antibody and diagnostic immunoassay markets, we have now regained our mojo, and upgrade Abcam back to Buy."

The new initiative will see Abcam work with diagnostic and therapeutic companies, providing commercial rights to specific antibodies in return for an upfront fee and low to mid-single-digit royalties on sales.

The analysts estimated that at the current rate of development, and just for diagnostics, Abcam Inside may already be worth 500p per share, with therapeutics offering additional upside.

Furthermore, risks surrounding Abcam remain low due to high barriers for entry into the antibody research market which resulted in slow-moving market shares.

"China, where Abcam is stretching its leadership position, continues to be a key driver of growth, and the company is also gaining share from the one main competitor in rabbit monoclonal antibodies, the fastest growth category in research antibodies overall. Abcam’s recent trading statement confirms that it is growing around twice the market rate," said the research note from Berenberg.

Abcam’s shares were up 6.79% at 1,447.00p at 1509 BST.