hVIVO PLC (AIM:HVO) results and outlook showed how the human challenge trial specialist is well-positioned for further growth, said analysts.
Revenues were up 16% to £56 million, as already disclosed, and EBITDA margins increased to 23.3% from 18.7%, ahead of forecasts, said Stifel analyst James Orsborne, who upped his forecasts and target price.
Orders are reported at £80 million, underpinning company guidance of 10% revenue growth to £62 million for 2024.
"Given that 90% of 2024 revenues are already contracted and visibility is building into 2025," Orsborne said he is "positive on the outlook for the business and confident it will deliver on its guidance".
Stifel's revenue forecast remains unchanged, but EBITDA estimates increased 10%, which leads to a new target price of 35p versus the last close price of 29p.
The shares have risen over 90% during the past 12 months, leaving the valuation "beginning to look stretched", said Orsborne, but he added, "We continue to see further upside here given hVIVO's stronger growth profile vs peers, potential for further margin progression and market-leading position in the human challenge trial space".
Seb Jantet at Liberum felt the current price remained inexpensive.
"The shares have lost a bit of momentum since the placing and while there isn’t a major catalyst in today’s statement, we would expect them to regain momentum as the year progresses," Jantet said.
"The shares aren’t expensive, relative to growth or peers and the dividend will attract investors who like at least some income."
Liberum values the shares at 15 times EBITDA, which gives a 34.5p target price.
Miles Dixon at house broker Peel Hunt also noted the operational progress, exemplified by the fit-out of the new facility at Canary Wharf ready to commence its first quarantine this month, ahead of schedule, and that 2023 saw the highest number of healthy volunteers inoculated.
"We see really strong momentum in the business and a careful and conservative tone when it comes to guidance."
Seeing the shares on 12.8 times EBITDA, he said, "We see further potential multiple expansion if the company continues in this current trajectory".
Analyst: Miles.Dixon