Thread by @TaylorQuant

Novacyt.

Coming clean.

There's a deceit that goes around the social media game when it comes to pushing stocks and many of us are admittedly a part of that.

#NCYT #ALNOV #NVYTF

The 1st deceit is the lack of emphasis on how extremely volatile the market is for any particular stock on AIM - it only really gets discussed after the fact, like today for example.

30% and 40% swings in a week is extreme.

You're better off trading that.

We all know it.

The 2nd deceit is timescales and volumes - no-one knows when certain deals or products will land, because that is constantly in flux within the business and their partners.

If they don't know. We don't know.

If you think something might land in a few weeks - change that to a few months.

That's more realistic for expectations.

For many of these stocks of course - you can change that to never.

The 3rd deceit is that we're somehow representing a company's best interests by promoting it.

Very often our fervour for a business is damaging it in ways they can't communicate to us and very often we know it as we're doing it...

Simply to ramp the stock price.

That's short term thinking.

If you really want a company to do well, you need to think about the long term nature of that company's performance and not focus on the daily share price movements.

Promotion of a stock daily doesn't have any bearing on the company's end performance

And that's what ultimately will give the stock price a high level of support amongst institutions.

And reward a long term holder who wants a significant return on their investment without having to trade volatility.

Because many investors are simply looking for a good company.

They're not traders.

Which is probably for the best, because even professional trader gets it very, very wrong.

Novacyt's results last week proved one thing though.

That if you were to pick through the incessant ramping of dozens of biotech stocks on AIM as the pandemic arose - there was one which was a clear winner.

If I had wrote that before the annual results, that would have been a bit of a ramp.

Now we know that's not the case.

Novacyt was the clear winner. They had the structure, talent, the positioning and the opportunity.

Last year was merely foundational of course for the company and the pandemic has slowed the ability of PR to hit the road - ODDO for example - run regular roadshows, meet and greets, so institutions can take large positions, long term, in excellent businesses.

These aren't on.

Novacyt is suffering as a result of the pandemic on the PR end, while at the same time they are helping governments, businesses and citizens fight their way out of the very same pandemic.

It's a paradox - however they are being compensated by incredible revenues & margins.

Novacyt now gets to take their new partnerships, technology and revenues to grow the business.

We don't know the outlook on how that works yet.

We only had confirmation last week that it was genuinely making over 1/4 billion a year.

For many of us - that's enough. NUMIS has also proven their accuracy in forecasting revenues.

Without taking into account any future large deals, or any new product revenue streams, they have upgraded Novacyt's 2022 earnings.

Which positions the company to push nearly 1/2 Billion GBP over the next two years.

That's this company's base case right now.

What that will do is give Novacyt a 3 year average forecast of 250 million + a year excluding any future growth pivots.

We know of course new products will come, and as Novacyt corrected in their RNS, they put out 10 noteworthy products last year alone, with significantly less R&D capital than they have currently available.

To get an update on growth plans and the road ahead - it's mostly likely to come after sensitive negotiations are behind them.

Negotiations that would change that 3 year 250 million average into something much higher - not simply from the revenues accrued..

but from the ability to further accelerate growth plans both organically and inorganically.

We've all played our part in pushing this company.

Many of us truly believed they could do it. They have done it.

Novacyt in my personal view is now in a win/super win situation.

They have a PR issue which cannot be resolved immediately, but will fix itself over time.

This is a good problem to have - the more cases go down and the pandemic recedes, the more PR Novacyt can move on with.

The pandemic ending is not Novacyt's enemy.

It is their chance to take their growth plans into new areas and do the work with institutions to promote themselves as a high growth diagnostics player in a growing 60 billion + market.

That's when Novacyt can attract proper PE ratios.

For now though, I think apologies are in order. Many PIs were expecting a huge rally upon confirmation of staggering revenues and future revenues forecasted into 2022 by the broker.

That didn't happen, and the 3 issues above are partly to blame.

The emphasis simply wasn't there on how incredibly volatile the stock currently is and many investors are now hurting for it - wondering why and how this can happen.

How can a company that does this well, perform so poorly on the market?

That's a big question - and the answer is multi-varied.

What is certain though is that the year is only getting started and Novacyt have proven themselves.

We can't predict short term share price movements, but for me this is a safe hold because I believe that the recent update on annual revenues will have calculators clicking among fund managers as we speak today.

It is them I'm expecting to take this stock price up, not PIs.

For everyone who is feeling frustrated, even angry - I hope that's soon.

(A couple of us here even added more over £10 last week 🤦‍♂️)

Onwards and upwards. Amazing work by @PrimerdesignLtd

Diamond hands here.

💎🙌