The latest contract win by hVIVO plc has been roundly applauded by brokers.
The clinical research specialist has landed a £2.5 million characterisation study for a Covid variant from an unnamed mid-tier pharma company.
"This development is clearly positive for hVIVO as it continues to diversify its revenue streams—previously devoid of coronavirus-related work—and positions the company to support a broad range of BioPharma clients with their forthcoming coronavirus-related projects," said Peel Hunt in a note to clients.
Liberum, repeating its 'buy' advice and 34.5p price target, added: "This is the first contract win announced for a while, but we don’t read too much into that as the company has made it clear that it doesn’t intend to announce all contracts."
Both brokers think the stock is undervalued. Repeating its 36p target price, Peel pointed out that hVIVO is valued just over 11 times next year's underlying earnings (EBITDA) while peers with 'markedly lower growth rates' than the AIM listed group are on an average 15 times.
Earlier on Monday, hVIVO said it had been asked to develop the world's first Omicron BA.5 challenge model. It will take place at hVIVO's state-of-the-art quarantine facility in Canary Wharf.
Researchers will use healthy volunteers aged 18-30 who have been fully vaccinated against COVID-19.
The study aims to determine a safe and effective Omicron BA.5 virus dose to help test future antivirals and vaccines. it is set to begin in late 2024, with most revenue expected in 2025.
Omicron BA.5 is a subvariant of the Omicron variant of the SARS-CoV-2 virus, which causes COVID-19.
The Omicron variant is known for its high transmissibility and ability to evade some immune protection from vaccines and previous infections.
BA.5 has specific mutations in its spike protein that may affect how the virus spreads and how well it can evade the immune system.
This subvariant has contributed to waves of COVID-19 infections around the world.
In afternoon trading, the shares were up just under 1% at 26.98p.