Animalcare Group PLC

Animalcare Group PLC (LSE: ANCR) is an FTSE AIM All-Share listed UK-based international company specializing in veterinary sales and marketing. It focuses on introducing new products to the market through in-house development, strategic partnerships, and acquisitions. The company develops and distributes both prescription and over-the-counter pharmaceuticals aimed at enhancing animal health and wellbeing. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 252.00

• Resistance near Current levels: ANCR’s stock price crossed the Resistance (R1) which was stated in the previous report on 06 March 2025 therefore, there can be a possibility of a decline in resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.

• Gross Margin Pressured by Cost Inflation and FX: Gross margin declined to 55.6% in FY2024 from 56.8% in the prior year, driven by product category mix, rising COGS and logistics costs, and negative foreign exchange impacts, partially offset by pricing actions in select markets.

• Weaker Performance from New Product Launches: Sales from new product launches contributed only £1.4mn in FY2024, down from £1.9mn in FY2023, falling short of expectations due to launch delays and supply chain constraints, limiting the contribution from innovation.

• Rising Overheads Impact Operating Efficiency: Underlying overheads increased to £29.7mn, up 3.8% YoY, driven by inflationary salary hikes, expanded headcount in commercial and supply chain teams, and ongoing regulatory compliance costs, reducing operational leverage.

• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

ANCR is expected to trade at a discount, weighed down by multiple pressures: Gross margin declined to 55.6% in FY2024 from 56.8% due to cost inflation and FX headwinds; underlying EBITDA remained flat, highlighting margin compression; new product launches underperformed expectations; rising overheads impacted operational efficiency in FY24; the Companion Animal segment faced mixed performance, and structural cost burdens—including policy disadvantages and elevated inflation—continue to weigh on profitability.  For conducting the valuation, the following peers have been considered: Advanced Medical Solutions Group PLC (LSE: AMS), hVIVO PLC (LSE: HVO), etc.

Given its current trading levels, the recent financial performance, strategic investments and partnerships, market expansion and cost optimization strategies, 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 Closing Market Price of GBX 252.00 as of 12 May 2025. 

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 12  May 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.’

Note 6: Dividend Yield may vary as per the stock price movement.