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- 1 AVCT stock price: The Avacta Group Plc’s stock rose up more than 34% in less than 15 days
- 2 The company has posted half-yearly reports with more than 115% revenue growth
- 3 The current share price is near a resistance but the breakout is looking tough
Involved in the business of Affimer diagnostic products, Avacta Group (LON: AVCT) manufactures new Affimer medicines and licenses them to large pharma companies. It operates through the Life Sciences and Animal Health segments
The Extraordinary Growth
In the Half-yearly report of June 2023, the Avacta group reported revenue of £11.1M, showing a remarkable growth of 115% Year on year (YoY), catering to many investors’ attention. Now, looking at a more comprehensive view, Last year’s revenue came with a growth of 228% while the gross profit margin was 43.8%.
The company was making losses in its operations, which gives the answers to the revenue growth as the management is heavily reinvesting. Last year the management controlled its operational expenses by 12% compared to the previous year.
Despite this cut, the net income for the last year was reported to be -£39.5M. Due to this negative net income, primary profitability ratios like earnings per share and return on equity are also negative and thus invalid to consider.
The increasing debt
One of the significant concerns to the investors is the company’s Debt-equity ratio, which, for the last year, was 3.4. That indicates it has 3.4 times more debt than its retained earnings and share capital. It means the company is heavily indebted.
Technical Analysis and Prediction of AVCT share price
In April of last year, the AVCT share price reached a high of £140 before entering a slight bearish phase until the end of that year. The stock took a roller coaster ride between £95 and £137 during this time.
However, in the new year of 2023, the bulls were finally able to break past the significant resistance levels. Consequently, the price reached the £185 mark in February of the same year. Since then, the AVCT share price went into a bearish phase, broken in September of this year after confirming the uptrend.
Correction is possible
This uptrend has broken some significant resistances at the press time. The current share price is trading at £154 as it rose after its half-yearly earnings report. The immediate resistance is at £1678, while the support for the bulls is at £140.
The RSI confirms that the stock has risen too fast to sustain, as it is at the overbought level of 77. That indicates a possible short-term correction. The AVCT share price prediction is bearish, as it is likely that the bears will reclaim the current resistance level.
Conclusion
Avacta Group (LON: AVCT) has posted positive earning reports over the past years. Recently, the half-yearly report was posted with huge revenue growth which made the stock surge up. The current price is near a resistance but the predfiction is bearish for the short term
Technical Levels
Support: £140, and £121
Resistance: £167, and £182
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks comes with a risk of financial loss.
Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.
