Canaccord Genuity Maintains Hold Rating for Olink Amid Thermo Fisher Acquisition

Olink Holding AB, a leading provider of proteomics solutions, has reported mixed Q1 2024 financial results, with revenue increasing 5% year-over-year to $28.8 million, but missing analyst expectations. The company's future is uncertain as it awaits the outcome of the UK Competition and Markets Authority's investigation into its proposed $3.1 billion acquisition by Thermo Fisher Scientific, which could impact the proteomics market and Olink's valuation as an independent entity." This description focuses on the primary topic of Olink's financial results and the proposed acquisition, the main entities involved (Olink and Thermo Fisher Scientific), the context of the proteomics market, and the significant actions and implications related to the subject matter. The description also provides objective and relevant details that will help an AI generate an accurate visual representation of the article's content.

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Bijay Laxmi
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Canaccord Genuity Maintains Hold Rating for Olink Amid Thermo Fisher Acquisition

Canaccord Genuity Maintains Hold Rating for Olink Amid Thermo Fisher Acquisition

Canaccord Genuity has reaffirmed its Hold rating for Olink Holding AB (NASDAQ: OLK) with a price target of $26.00, following the company's mixed Q1 2024 financial results. Olink, a leading provider of proteomics solutions, reported a 5% year-over-year increase in revenues to $28.8 million for the quarter ended March 31, 2024, missing analysts' expectations of $30 million.

Why this matters: The acquisition of Olink by Thermo Fisher Scientific has significant implications for the proteomics market, potentially altering the competitive landscape and influencing the development of new technologies. The outcome of the UK Competition and Markets Authority's investigation will have a ripple effect on the industry, shaping the future of research and innovation in the field.

Despite missing revenue and gross margin expectations, Olink showed strength in adjusted EBITDA and key operating metrics. Revenue from kits rose 30% to $17.6 million, while service revenue declined 25% to $7.8 million, and other revenue decreased 6% to $3.3 million. The company installed 14 Explore instrument platforms and 16 Total Signature Q100 platforms, bringing the total installed base to 121 and 202, respectively.

Olink has been in the spotlight since October 17, when Thermo Fisher Scientific (NYSE: TMO) announced plans to acquire the company for $26.00 per American depositary share in a $3.1 billion deal. The acquisition is currently under review by the UK Competition and Markets Authority (CMA), which has initiated a Phase 1 investigation. The CMA's decision is expected by July 8.

While the acquisition is anticipated to finalize by mid-2024, the ongoing regulatory review introduces an element of uncertainty. On March 20, Thermo Fisher received clearance from the Swedish Inspectorate of Strategic Products with respect to the proposed transaction. However, the outcome of the CMA's inquiry could influence the future of the merger and Olink's valuation as an independent entity.

Olink's Q1 net loss was $16.1 million, or $0.13 per share, compared to $14.0 million, or $0.11 per share, in Q1 2023. The company's R&D spending grew 64% to $10.5 million, while SG&A expenses jumped 18% to $33.4 million. Olink finished the quarter with a cash balance of $109.3 million.

Current market conditions and regulatory developments are pivotal factors in assessing Olink's standalone value, especially if the merger faces obstacles. As the CMA's investigation unfolds, investors and industry observers will be closely monitoring the implications for Olink and the broader proteomics market.

Key Takeaways

  • Canaccord Genuity reaffirms Hold rating for Olink Holding AB with $26.00 price target.
  • Olink reports 5% YoY revenue growth to $28.8M, missing analysts' expectations.
  • Thermo Fisher Scientific's acquisition of Olink under review by UK Competition and Markets Authority.
  • Olink installs 14 Explore and 16 Total Signature Q100 platforms, expanding its installed base.
  • Olink's Q1 net loss widens to $16.1M, or $0.13 per share, due to increased R&D and SG&A expenses.