Avacta shares climb after regulatory approval - could this continue?
Avacta Group has gone from strength to strength in the past year, using its expertise to develop highly accurate Covid-19 tests. Following regulatory approval for a new antigen test, will the Avacta share price rise again?
![Avacta shares](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/bg covid coronavirus testing 361782464.jpg/jcr:content/renditions/original-size.webp)
- The Avacta share price has risen 1400% since January 2020
- Shares rose to 220.5p when markets opened on 17 June
- Avacta was one of the first to produce rapid Covid-19 tests for the mass market
- UK regulatory authorities have just approved a new Avacta antigen test
- Ready to trade the Avacta share price? Open an account today
Why have Avacta shares risen by 1400%?
Outside a limited circle of health tech investors, few people had heard of Avacta Group this time 18 months ago. The Yorkshire-based life sciences company originally focused on cancer treatments and diagnostics but decided to pivot towards developing rapid Covid-19 tests not long after the pandemic hit.
Thanks to the high levels of accuracy from Avacta tests, which initially hovered at around 96%, the Avacta share price surged continuously throughout 2020 and beyond, landing at a peak of 275p on 10 May 2021.
Although the share price has dipped since then, it was bolstered once more on 7 June following the news that UK regulatory authorities had approved Avacta's rapid lateral flow antigen tests for general use. This means that the tests will likely be used widely throughout the UK by both public and private bodies.
Only four days later, on 11 June, Avacta experienced another win when those same antigen tests, which reportedly have a 100% accuracy rate, were granted approval by the European Medicines Agency. The share price quickly jumped once it was clear that Avacta could begin selling its rapid tests for use throughout the EU bloc, which is home to 445 million people.
What are the risks ahead for the Avacta share price?
Although it would seem that Avacta is in a solid position and that its continued revenues are assured, there are significant dangers ahead for the company. Most alarming is the fact that Avacta is yet to make a profit from its Covid tests, having earned £3.64 million in revenue in 2020, while reporting losses of more than £18 million.
Meanwhile, Avacta's £650 million market cap is more than 140 times higher than the expected revenues for the whole of 2021, which are expected to reach £4.5 million. Although investors clearly remain optimistic about the future of the company, these underlying metrics could spell trouble for the future share price.
Is the Avacta share price on the rise for the long term? Trade Avacta shares today
Take your position on UK shares for just a small initial deposit with spread bets or CFDs. Spread bets are completely tax-free, while CFDs are free from stamp duty.1 You can also buy and take ownership of UK shares for just £3 with us.2
Open an account to start trading or investing in UK shares.
1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 Deal three times or more in the previous month to qualify for our best rate.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/Article_banners/Shares-global-component-banner.jpg/jcr:content/renditions/original-size.webp)
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.