hVIVO PLC (AIM:HVO), the human challenge trial specialist, reported a sharp fall in revenue and profitability for 2025, but Cavendish argued on Wednesday that the numbers mask a more encouraging underlying story and that the company is better positioned heading into 2026 than the headline figures suggest.
The broker, which maintains a 'buy' rating and 16.5p target price against a current share price of 8.7p, kept its 2026 revenue forecast virtually unchanged at £50.3 million following the results, reflecting management guidance for high single-digit growth weighted towards the second half of the year.
Cavendish's analysis went beyond the numbers to make a case that the quality of hVIVO's earnings base has improved, even as the top line contracted from £62.7 million to £46.8 million and adjusted EBITDA fell from £16.4 million to £2.2 million.
The broker highlighted two specific changes it views as meaningful signals of a more disciplined commercial operation: the tightening of contract terms and the decision to rebase the orderbook to include only contracts signed under clinical trial authorisation, excluding higher-risk start-up agreements.
In Cavendish's view, that narrower definition makes the reported £30 million orderbook a more credible indicator of near-term revenue certainty, even though it appears smaller than the prior year's restated £43.5 million figure.
The broker also stressed that maintaining any positive EBITDA margin in a year of sharp revenue decline typically requires decisive cost action alongside improved operational throughput, and argued that hVIVO demonstrated both.
Looking further ahead, Cavendish pointed to favourable structural conditions for the contract research sector, including a wave of patent expiries between 2025 and 2030 expected to drive pharmaceutical merger and acquisition activity and increased outsourcing of early-stage research to specialists such as hVIVO.
The broker expects the next two reporting periods to provide the operational proof points investors are waiting for, covering recovery in the human challenge trial market and evidence of cross-selling across the expanded four-service-line platform, with reported operating profitability expected to return in 2028.