UK stocks have largely had a terrific run so far this year. But despite the British stock market’s upward trajectory, plenty of cheap shares are still being left behind. Some even pay attractive yields, which opens the door to potentially ample passive income.

Take Bioventix (LSE:BVXP) as an example. Year-to-date, shares are actually down almost 13%, raising the biotech group’s yield to 4.2% while dragging the price-to-earnings (P/E) ratio down to 23. The latter may not scream bargain. However, considering that this UK stock has historically traded at a much higher premium, it looks like a buying opportunity may have emerged.

Understanding Bioventix

The world of biotech can be quite daunting to explore. After all, modern medical research is a complex field with many businesses chasing similar opportunities. Fortunately, Bioventix is a very niche but incredibly critical business that makes it easier to understand.

The firm’s a manufacturer of monoclonal antibodies used for detecting diseases throughout the human body, such as cancer and heart disease. Labs and hospitals around the world are in need of a constant supply, which Bioventix is more than happy to provide. And over the years, its translated into some impressive financials.

Annual revenue growth’s been a modest yet consistent 8% over the last five years – a trend that’s expected to continue. But the stars of the show are margins, with operating profitability standing at a whopping 79%!

That’s enabled Bioventix to be entirely debt-free despite operating in a capital-intensive industry. It’s also resulted in a cash-rich balance sheet as well as an impressive track record of hiking dividends. In fact, shareholder payouts have been hiked by an average of 21.4% for 10 years in a row so far.

Risk vs reward

It’s clear from the firm’s track record that Bioventix has been a terrific source of passive income over the last decade. And when paired with a 540% increase in share price over the same period, the stock’s also been a stellar investment. But now the question is whether the company can continue this upward trajectory?

From a customer demand perspective, Bioventix doesn’t seem to have any major issues. Manufacturing antibodies is difficult. And while there are alternatives, the group appears to have made itself stand out versus its peers in terms of product quality.

However, this doesn’t automatically make it a guaranteed future success story. The firm’s still exposed to demand cycles from customers. And in its latest interim results, Bioventix is having to tackle some issues on this front. Its Troponin antibodies used to assess heart damage have suffered from softer demand of late, resulting in lower-than-expected revenue generation.

Long-term demand remains promising, but temporary weakness within a small-cap AIM stock can be significant enough to trigger volatility. Nevertheless, with management expanding its portfolio of antibodies for use in new tests for diseases such as Alzheimer’s, the risks may be worth taking. At least, that’s what I think. And it’s why I’m planning to snap up some shares for my passive income portfolio once I have more capital at hand.