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Abingdon Health (ABDX) Shares Rallied on Deepverge Deal. What’s Next?

Simon Mugo trader
Updated 30 May 2022

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Key points:

  • Abingdon Health shares surged 7% on the Deepverge LFT contract.
  • The two firms will collaborate t develop lateral flow tests for Modern Water.
  • ADX shares seem to have bottomed on the daily chart.

The Abingdon Health PLC (LON: ABDX) share price surged 7% higher after signing a manufacturing and development contract with Deepverge (LON: DVRG) to manufacture Deepverge’s lateral low tests.

Deepverge’s Modern Water division will use the lateral flow tests (LFTs) to detect dangerous pathogens and chemicals in household drinking and wastewater. The LFTs will also be used to test for the presence of acrylamide, microcystins, and algae within public water systems.

Also read: The Best Healthcare Stocks To Buy Right Now.

The two companies will also collaborate on developing a traceable polymer system to measure the levels of polymers added to water during treatment. The new LTF units will allow Deepverge to understand water chemistry better and optimise water treatment levels by ensuring no under/overdosing of water.

Abingdon Health will also work to convert Deepverge’s current Sulfate Reducing Bacteria (SRB) optimisation process, which involves several tedious processes, into a lateral flow test. The conversion will save Deepverge a lot of time and money and will accelerate the time in which the firm gets its results. The SRB business is worth over $100,000 to Modern Water.

Investors appeared unimpressed by today’s news despite its significance to the ongoing collaboration between the two companies and its positive long term prospects.

Abingdon Health shares have formed a bottoming pattern after being in a long term downtrend since January 2021 after the UK health department cancelled its COVID-19 test kits order.

Therefore, it is encouraging to see the company win other commercial contracts with other businesses instead of government contracts that are usually prone to significant public scrutiny.

While the financial details of the agreement were not made public, the deal could be very lucrative over time, given the growing demand for chemically tested water both from public water companies and individuals.

The rising cases of water contamination exacerbated by the COVID-19 pandemic have made consumers keen on the quality of water they drink and use within their households due to the health risks posed by pathogens found in water.

Looking at Abingdon Health’s daily price chart, the bottoming pattern could lead to a strong rally in the coming weeks.

*This is not investment advice. Always do your due diligence before making investment decisions.

Abingdon Health share price.

Abingdon Health share price 30-05-2022
Source: IG

Abingdon Health shares rallied 6.98% to trade at 11.50p, rising from Friday’s closing price of 10.75p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading