hVIVO PLC’s respiratory syncytial virus (RSV) drug contract announced on Wednesday “should be taken well by the market”, reckon Cavendish analysts, despite shares already ripping 80% higher year to date
This full-service, end-to-end contract is forecast to bring in revenues of £16.8 million from 2023 to 2025, with the bulk expected in 2024.
In a research note, Cavendish contended that “market awareness of respiratory pathogens, their health and health economic consequences and the significant commercial potential for safe and efficacious agents to prevent infection has increased significantly”.
The RSV market is expected to be worth around US$9 billion by 2029, and hVIVO's advanced human challenge model is seen as crucial for companies developing RSV treatments, especially those behind in the market race.
Cavendish also shed light on hVIVO's 2023 trading performance.
The company reported strong trading with revenues slightly exceeding market expectations and EBITDA margins expected to exceed 20% for the year.
Despite this positive update, Cavendish has maintained revenue forecasts at £55 million, though improvements in operational efficiencies are likely to boost margins in the next couple of years.
“hVIVO’s valuation is, in our mind, undemanding, for the highly visible near-term growth we expect and consistent delivery of targets by management,” said Cavendish.
A target share price of 35p implies a 75% upside against hVIVO’s 20p publication price.