Cavendish analysts believe the market will respond positively to hVIVO PLC’s announcement of a significant respiratory syncytial virus (RSV) drug contract, even though the company’s shares have already surged by 80% since the beginning of the year.
The comprehensive contract, covering full-service and end-to-end solutions, is projected to generate £16.8 million in revenue from 2023 to 2025, with the majority expected in 2024.
Cavendish highlighted in their research note the growing market awareness of respiratory pathogens and their health impacts, as well as the substantial commercial potential for effective agents that prevent infection.
The RSV market is anticipated to reach approximately US$9 billion by 2029. hVIVO’s sophisticated human challenge model is deemed vital for firms developing RSV treatments, particularly those lagging in the market competition.
Additionally, Cavendish provided insights into hVIVO’s trading performance for 2023. The company reported robust trading, with revenues slightly surpassing market forecasts and EBITDA margins predicted to exceed 20% for the year.
Despite these positive developments, Cavendish has kept its revenue forecast for hVIVO at £55 million. However, they expect operational efficiencies to enhance margins in the upcoming years.
Cavendish remarked on hVIVO’s valuation, considering it reasonable given the company’s highly visible near-term growth prospects and consistent achievement of targets by its management.
They set a target share price of 35p for hVIVO, suggesting a 75% potential increase from the company’s 20p publication price.
