Why the ALS (ASX:ALQ) share price is charging higher today

This testing services company's shares are rising today…

| More on:
A boy looks up and points his fingers to the sky in celebration pose.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ALS Ltd (ASX: ALQ) share price is on the move on Wednesday morning.

At the time of writing, the testing services company's shares are up 3% to $12.94.

Why is the ALS share price rising?

Investors have been bidding the ALS share price higher today after the release of its annual general meeting presentation and the announcement of an acquisition.

In respect to the former, the presentation took investors through the company's performance in FY 2021 and provided an update on trading so far in FY 2022.

ALS has started FY 2022 strongly and is expecting this to lead to solid first half profit growth. Management has provided guidance of first half underlying net profit after tax of between $115 million and $125 million. The midpoint of this guidance range represents a sizeable 49% increase on the prior corresponding period.

It advised that this reflects the strong start that it is seeing across its Life Sciences and Commodities divisions as volumes continue to improve as global activity increases.

Acquisition news

Not included in its first half guidance is the proposed acquisition of an initial 49% interest in NUVISAN, a pharmaceutical testing business with operations in Germany and France.

Management believes the acquisition provides it with the platform to expand its offering from quality control testing into 'upstream' services in research and development.

Growth in this area of the market is driven by major pharmaceutical companies outsourcing drug development research and testing due to increasing pricing pressure, lack of internal capability, and expertise from external providers.

ALS will initially acquire 49% of the equity in NUVISAN for a consideration of ~EUR145 million. It also has an exclusive call option to acquire the remaining equity from 1 January 2024. This option expires by 30 September 2026 at the latest.

Should this option be exercised, the remaining 51% equity in NUVISAN will be acquired at 13x adjusted EBITDA based on the 12 months preceding the purchase.

ALS' Managing Director and CEO, Raj Naran, commented "This is a significant expansion of our Life Sciences capability as we grow our presence in the strategically important Pharmaceutical market. This will allow us to move our service offering up the supply chain into drug development and research testing, which significantly expands our addressable markets. NUVISAN offers us a platform in the key markets of Germany and France which has long been an aspiration for our Life Sciences division."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Top ten gold trophy.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors endured a sour end to the trading week today.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Boral, FBR, Origin, and Regis Resources shares are pushing higher today

These ASX shares are ending the week positively. But why?

Read more »

A woman is excited as she reads the latest rumour on her phone.
Share Gainers

Why Computershare, Core Lithium, Northern Star, and Vulcan Energy shares are storming higher

These ASX shares are avoiding the market weakness. But why?

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Materials Shares

How has the Liontown share price rocketed 15% in a week?

There's one factor that might explain Liontown's explosive performance of late.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why EOS, Novonix, St Barbara, and Whitehaven Coal shares are storming higher

These ASX shares are having strong sessions. But why?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a strong showing from ASX shares this Tuesday.

Read more »

two people celebrating good news, stock rise, price increase, positive announcement
Share Gainers

Why Ansell, Elders, Predictive Discovery, and Rio Tinto shares are storming higher

These ASX shares are having a strong session. But why?

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX's trading week was off to an encouraging start this Monday.

Read more »