The going remains tough for Acuity Brands (NYSE:AYI). While I don’t really love the business, I thought back in January that the valuation seemed low relative to even modest (low single-digit) long-term growth assumptions, but the shares have since underperformed the industrial group, perhaps due to the company’s high exposure to non-residential new-build construction and relatively little exposure to green building retrofits, as the LED upgrade cycle is largely mature.
Now there’s a new potential driver to consider – Far-UVC lighting as a retrofit product for building hygiene. Unlike conventional UVC systems, Far-UVC lighting systems can kill viruses, including SARS-CoV-2, but are still safe to use while the building is occupied. Given the sheer installed base for potential retrofits, this could provide an important spark to Acuity’s story in calendar 2021 – and the stock really could use a spark, as although it continues to look undervalued on undemanding expectations, the Street has shown it really isn’t interested in commercial lighting businesses.
Plan C?
UVC lighting has been used for some time to disinfect spaces, but its use has largely been confined to areas like healthcare or mass transit where the lighting can be used at “off times” to disinfect unoccupied areas – while UVC is an effective pathogen-killer, it is also dangerous to humans, animals, and plants, with potential damage to skin, eyes, and other systems.
Recent tests of Far-UVC lighting, which operates at 207-222nm versus most UVC lights which operate at 254nm, have shown some promising results. While testing conducted by Signify (OTCPK:PHPPY) and Boston University that showed UVC could kill SARS-CoV-2 wasn’t so surprising (it was already known that UVC can kill coronaviruses), Columbia University has come out with research showing that not only can Far-UVC effectively kill cornonaviruses, it can do so without harming
