Genetic Analysis - Growth and cost reduction – Mangold Insight Analys

Genetic Analysis, with its GA-map technology, increased sales by 22 percent in the second quarter to 3.7 million NOK* compared to same period last year. An inventory effect from a major customer had a negative impact on sales, which meant that the company did not reach our estimate. Due to the pandemic, an inventory build-up at a customer site have occurred over time. The customer has started to build down the inventory in Q2 but it could also spill over to third quarter. The operating costs were lower, and the operating loss was reduced to NOK 5.3 million. Several new customers have been added since the Q2-report, which is expected to contribute to increased sales in the long term.

The microbiome market is growing, but still in an early phase. Standardisation of diagnostics in this area is in great demand by pharma companies. Genetic Analysis has a prominent position for diagnostic tests. More approved drugs on the microbiome market are expected to drive growth as well as deals like Viome have done with CVS Pharma.

Mangold has chosen to adjust sales for 2023, taking into account previous inventory build up at customers which affected the valuation. Also coming years have been adjusted. It is still early in the sales cycle and sales depends on collaborations which gives uncertainty in our estimates. Mangold lowers the price target to SEK 3.40 (4.00) per share. This still leads to a large upside in the share of over 100 percent.