Shore Capital has initiated coverage on hVIVO PLC (AIM:HVO) with a bullish outlook, setting a 'fair value' target of 35p per share — more than double its current trading price of 17.22p.
The firm believes hVIVO, a specialist in human challenge trials (HCTs), is well-positioned for strong growth as pharmaceutical companies ramp up investment in infectious and respiratory disease research.
It runs clinical trials where volunteers are exposed to pathogens to test new drugs and vaccines. The company has recently expanded its services, adding virology lab capabilities and acquiring two clinical research units in Germany.
This diversification is expected to smooth out revenue fluctuations and open up cross-selling opportunities.
The investment note highlights hVIVO’s ambition to hit £100 million in revenue by 2028, driven by demand for its unique HCT services, which help drug developers make faster, more informed decisions before committing to expensive late-stage trials.
It also points out that the company’s new facility in Canary Wharf should improve efficiency and boost capacity.
Shore Capital argues that hVIVO is undervalued, trading at a steep discount compared to its contract research peers. The note suggests that its industry-leading position and growing market share could make it an attractive takeover target.
With a strong cash position and no debt, hVIVO is in good financial health to pursue further acquisitions.
While recent share price weakness reflects sector-wide concerns, Shore Capital sees significant upside potential, reinforcing its ‘buy’ recommendation.