MARKET REPORT: British pharma shines with coronavirus test

Testing has always been key to battling coronavirus. 

But, now that governments are shifting their attention to easing lockdown restrictions, testing both for the active virus and the evidence someone has already had it are more important than ever. 

Two British pharmaceuticals groups shone on AIM yesterday on their testing-related milestones. Novacyt has inked a deal with the Department of Health to provide it with 288,000 tests a week for six months from May 4. 

The Government has said it wants 100,000 tests taken every day although it is struggling to hit this target. 

The deal comes after questions were raised about why the government hadn’t placed more orders with companies such as Novacyt, whose Southampton-based division designed the kits. 

A fellow junior market-listed group, Omega Diagnostics, has made fresh strides in the race to roll out antibody tests that will be able to tell if someone has previously had the disease and has built up resistance to the virus. Omega last week it struck a partnership to manufacture tests developed by a firm called Mologic. 

Omega has now received CEMark, or European Union authorisation, for the test and will now finalise a long-term supply agreement to commercialise the test and make up to 46,000 a day, whopping 16m a year. Shares in Omega rallied 59.2 per cent, or 22.5p, to 60.5p, bringing its rally so far this year to around 300 per cent. 

And stock market darling Novacyt rose 12.2 per cent, or 45p, to 415p, bringing its year-to-date surge comfortably above 3,000 per cent. Contracting giant Mitie also got a boost in the arm from a testing-related update. Its share price rose 1.1 per cent, or 0.7p, to 64.7p after revealing it will provide key services such as security and clinical waste management at five UK test centres. 

The wider stock market started the week on the up, with the FTSE100 shrugging off another sharp drop in oil prices to close up 1.6 per cent, or 94.56 points, at 5846.79. Its mid-cap peer, the FTSE250 climbed 1.7 per cent, or 265.29 points, to 15952.72. Traders pointed to New Zealand tentatively claiming to have ‘eliminated’ coronavirus for the boost on global markets. 

The cautious victory accelerated shares in travel companies such as cruise operator Carnival (up 8.6 per cent, or 73.2p, to 922.4p) and package holiday provider Tui (up 14.3 per cent, or 39.4p, to 314.4p). Ashtead Group, which rents out construction equipment, was also on traders’ good sides. 

Shares rose 8.5 per cent, or 155p, to 1985p as it unveiled a raft of cost-cutting measures including halting a share buyback as it unveiled a profit warning, though it hinted it might still pay a full-year dividend. 

Recruiter Staffline rose 14.8 per cent, or 4.25p, to 33p, despite warning that demand for its services had stalled outside of the food sector. The company also appointed former Severfield chief executive Ian Lawson, who had been an independent adviser to its board, as chairman. 

Elsewhere, Flutter Entertainment and Dunelm managed to stay in the black despite being landed with broker downgrades. Citigroup analysts moved Flutter from ‘neutral’ to ‘sell’, as they bet online gambling and gaming revenues ‘could suffer’ from long-running lockdowns. 

But its shares rose 0.9 per cent, or 82p, to 9126p. 

And homeware retailer Dunelm inched 0.4 per cent higher, or 3.5p, to 878p, despite RBC Capital Markets brokers downgrading it to ‘sector perform’ after predicting consumers will not want to part with their cash even when the crisis is over.