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Shares of Abingdon Health PLC (LON: ABDX) rallied 12.6%, recouping some of its recent losses following its row with the government regarding the payment of £5 million owed to it for the supply of its AbC-19 lateral flow COVID-19 tests.
The British government cancelled the order but is yet to pay for the one million tests supplied by the company before the cancellation. The company slashed its revenue forecasts for 2021 by over half, triggering a massive selloff of over 30%.
The company’s fortunes seem to have reversed given today’s rally, but a one day rally cannot be categorised as an uptrend. We would need to get several daily gains before declaring that a new rally is in place.
It is unclear what caused today’s rally, but investors will be relieved to see that Abingdon’s shares are not falling further and could have bottomed following April’s selloff.
Abingdon Health also said that it was working on an overseas expansion. Still, the logistics are taking a while to set up, preventing it from exploiting ripe opportunities in other countries.
The UK Department of Health (DHSC) owes Abingdon a total of £6.7 million, which is likely to cripple the company financially if the amount is not settled. The firm’s management team warned that they might have to reduce its cost base if the bill is not settled soon.
Investors are hoping for good news to support another rally. The company’s decline was cushioned by retail traders who jumped on the opportunity to buy the dip in April.
The same group of investors may drive today’s rally.
Abingdon Health share price.
Abingdon Health shares rallied 12.61% to trade at 62.51p rising from Friday’s closing price of 55.50p.
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