hVIVO: Numbers starting to stack up, says broker

A contract-driven business always carries a degree of lumpiness.

For hVIVO PLC (AIM:HVO), the question now is whether that volatility can be managed convincingly enough to meet this year’s revenue guidance, or whether the share price will remain on ice until late in the year.

The clinical trial specialist is forecasting £73 million in sales for 2025, up from £63 million last year.

But the company entered the year with visibility over only about 70% of that figure, a thinner cushion than usual. Crucially, half of the missing revenue must land in the second half of the year, which means investors will likely be left guessing until autumn.

Realistic target

Still, Panmure Liberum believes the target is realistic. It argues that although revenue conversion is back-loaded, the company has enough tools and channels, from hLAB and Site Services to the newly acquired Cryostore and rapid-cycle consulting contracts, to bridge the gap.

Importantly, change orders for existing challenge trials, which are often decided and delivered quickly, could account for £4 million of this ‘go get’ revenue. Meanwhile, the LOI (letter of intent) with ILiAD Biotechnologies, while not yet funded, could unlock another £2.5 million.

Beyond that, the acquisition of CRS adds a new vector for short-lead-time contracts, even if the pipeline is only now gaining commercial traction. Combined, these should whittle down the remaining £7.8 million needed to hit the top line.

That said, political turbulence in the US healthcare landscape is making life harder. Budget cuts at the FDA, funding pressures at the NIH and talk of a shift to most-favoured-nation pricing on drugs have unsettled decision-making across the sector.

Manageable risks

CROs, including Lonza and IQVIA have noted similar hesitancy in recent calls.

hVIVO’s customers may delay greenlighting trials, which could push revenues out of 2025. Panmure flags this as a watch item, particularly in relation to ILiAD, but believes the risk remains manageable.

Financially, the model remains compelling. hVIVO is forecast to generate £12.4mn in EBITDA this year, with the second half delivering the lion’s share.

Baragin territory?

The stock trades at just 7.3 times 2025 enterprise value to EBITDA and is expected to yield over 1.3%, with net cash of £26 million. The forward multiple drops below 5 by 2026, making this one of the cheapest profitable names in the sector.

The analysts conclude that the current share price already reflects much of the execution risk. They maintain a Buy rating and 24p price target, which implies around 40% upside from current levels.

The next couple of months will be key. Contract newsflow and progress on ILiAD will help determine whether hVIVO can turn a credible plan into delivered results. Until then, investors will need patience, but the rewards, if it executes, look increasingly tangible.