Stifel, in its latest investment research note, underscores hVIVO PLC's robust standing in the global healthcare market, particularly in conducting human challenge clinical trials (HCTs) for infectious and respiratory diseases.
The investment bank forecasts hVIVO's revenue to reach £62 million in 2024, an estimation deemed highly achievable given the company's current contracted order book of £80 million as of the end of 2023. This order book represents a firm foundation, with 90% of the 2024 revenue already contracted and clear visibility extending into 2025.
hVIVO, a contract research organisation (CRO), specialises in the testing of vaccines and antivirals through HCTs.
These trials involve the intentional exposure of healthy volunteers to pathogens in a controlled environment, allowing researchers to study the onset and progression of diseases effectively.
This method is particularly valuable for its efficiency and the unique insights it provides into infectious diseases, making hVIVO a preferred partner for both large pharmaceutical companies and smaller biotech firms.
In 2023, hVIVO reported revenues of £56 million, marking 16% year-on-year growth, and demonstrated an increase in EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins to 23.3% from 18.7% in the previous year.
Looking ahead, Stifel anticipates the company's revenue to grow by 10% in 2024, with sustainable EBITDA margins, reinforcing its position as a compelling investment opportunity within the UK-listed healthcare sector.
Further bolstering its capabilities, hVIVO is set to open a new facility in Canary Wharf, which, following Health and Safety Executive (HSE) approval, will become the world's largest commercial HCT unit. This expansion includes plans for a containment-level-three lab, enhancing the company’s research capabilities significantly.
Stifel also notes hVIVO’s strong financial position, highlighting its £37 million in cash reserves and lack of debt, which strategically positions the company to pursue growth through organic avenues and potential acquisitions.
The US bank maintains a 'buy' rating for shares in hVIVO, citing its superior growth profile compared to peers, potential for further margin enhancement, and solid market position. The price target is 35p - a 33% premium to the current price.