Shares in hVIVO PLC (AIM:HVO), the human challenge trial specialist, were up 7% to 7.99p, extending a recovery that has seen the stock gain around 25% since the start of the year, after the latest in a run of contract announcements.
The catalyst for today's move is the signing of a £6 million clinical trial agreement to conduct an influenza human challenge trial for an unnamed biopharmaceutical company, the latest in a sequence of deals that analysts at Cavendish say is providing a "step change" to revenue visibility for 2026.
The new business follows the announcement last month of what hVIVO expects to be its largest human challenge trial to date, a phase III study in Bordetella pertussis signed with ILiAD Biotechnologies, and an earlier influenza trial with Traws Pharma.
Cavendish, which acts as corporate broker to hVIVO and carries a 'buy' rating with a 16.5p target price, said the cadence of wins reinforces its view that the company's integrated model, combining participant recruitment, clinical operations and in-house virology analytics, represents a differentiated and increasingly attractive offering.
The broker's forecasts point to revenues recovering from £46.8 million in 2025 to £50.3 million this financial year, representing growth of around 7.5% after a sharp contraction the previous year.
The backdrop to that decline matters for understanding the current recovery.
hVIVO entered 2025 with a significantly enlarged platform following its acquisition of CRS in early 2025, but revenues fell 25% as market conditions in the contract research sector deteriorated.
Profitability was hard hit, with adjusted EBITDA collapsing to £2.2 million from £17.3 million in 2024, leaving the company loss-making at the operating level.
Cavendish does not expect the company to return to operating profit until 2027, when adjusted EBIT is forecast at £0.3 million, with meaningful earnings not expected until 2028.
The bull case rests on two things: a rebuilding contract book and hVIVO's structural position as the world leader in human challenge trials, a niche but growing methodology in which healthy volunteers are deliberately infected with a pathogen under controlled conditions to evaluate new drugs rapidly and cost-effectively.
With net cash of £14.3 million and no debt, the company has sufficient runway to fund its recovery without immediate need for external capital.
A capital markets day scheduled for 11 June, at which clients including ILiAD Biotechnologies and Cidara are due to present, may provide the next opportunity to sharpen the investment case.
At 7.99p, hVIVO trades at less than half Cavendish's target price, a gap that reflects the scale of the earnings recovery still required rather than any near-term catalyst.