HVIVO PLC

HVIVO PLC (LSE: HVO) is an FTSE AIM All Share & United Kingdom-based specialist early-stage drug development contract research organization (CRO) and human challenge trials. The Company delivers end-to-end clinical development services to a diverse and expanding client base.

Key Recommendation Rationale – Sell at GBX 10.20

• Dependence on Large, Uncontracted Pipeline Opportunities: While the sales pipeline is described as "strong" and includes "advanced discussions" for major contracts, these opportunities are not yet contracted. The company's improved outlook for the full year appears contingent on successfully converting these discussions into signed contracts. This reliance on a few large, uncertain deals introduces a element of risk to their financial guidance, as any delays or decisions by potential clients to not proceed could negatively impact expected revenues.
• Significant Revenue and Profitability Contraction: The company's revenue for H1 2025 was £24.2 million, a notable decrease from the £35.6 million reported in the same period the prior year. Notably, the EBITDA margin (pre-exceptionals) has approximately halved, falling to around 12.0% from 24.5%. This indicates a substantial compression in profitability, suggesting that operational efficiencies and cost management have not been sufficient to offset the decline in high-margin revenue and the impact of a smaller project portfolio.
• Substantial Reduction in Contracted Orderbook: The weighted contracted orderbook has seen a sharp decline, standing at £40.0 million as of June 2025 compared to £71.0 million a year earlier. This 44.0% reduction implies a weaker visibility of future revenue and suggests that the conversion of the sales pipeline into firm, contracted business has been challenging. A smaller orderbook can lead to underutilization of the company's specialized and likely fixed-cost intensive clinical facilities, further pressuring margins.

Valuation Methodology: Price/ Earnings Approach

 Share Price Chart  

One-Year Technical Price Chart (as of September 01, 2025). Source: TradingView, Analysis: Kalkine Group

Conclusion

hVIVO's first-half financial results indicate a period of contraction. Revenue for H1 2025 was reported at £24.2 million, which is lower than the £35.6 million recorded in the prior year period. This has been accompanied by a decrease in the EBITDA margin. The company's contracted orderbook, which provides visibility on future revenue, was noted at £40 million, a figure that is also lower than the £71 million reported at the same time last year. This suggests that converting a sales pipeline, which the company describes as containing advanced discussions, into signed contracts has been affected by a delayed decision-making environment among biotech clients, leading to project cancellations and postponements.

For conducting the valuation, the following peers have been considered: Inspiration Healthcare Group PLC (LSE: IHC), EKF Diagnostics Holdings PLC (LSE: EKF), etc

Given its current trading levels, the recent strategic investments and partnerships, relative valuation, and associated risks, it is prudent to exit the stock at the current levels.

Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 10.20 as of 01 September 2025 at 08:03 AM GMT + 1.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 01 September 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’