(CVSG:AIM) 948.5p


Gain to date: 2.4% Orig­i­nal en­try point: Buy at 926.5p, 23 Au­gust 2018

OUR ‘BUY’ call on vet­eri­nary ser­vices provider CVS (CVSG:AIM) is mod­estly in the money and we’re stay­ing pos­i­tive on the stock.

Re­silient full year re­sults (27 Sep) and man­age­ment’s pos­i­tive over­all out­look for the busi­ness are re­as­sur­ing, although chal­lenges with re­tain­ing and re­cruit­ing vets may con­tinue to weigh on in­vestor sen­ti­ment.

Solid re­sults for the year ended 30 June re­vealed 20.4% top line growth to a record £327.3m and 7.1% growth in ad­justed pre-tax profit to £36m, with the cash gen­er­a­tive vet­eri­nary in­dus­try con­sol­ida­tor also declar­ing an 11.1% hike in the div­i­dend to 5p.

Ro­bust like-for-like growth of 4.9% was boosted by an ex­cep­tional per­for­mance from on­line drugs arm An­imed Di­rect, while the jump in group sales re­flected last year’s ac­qui­si­tion of 52 surg­eries.

Vet staffing is prov­ing a sig­nif­i­cant chal­lenge for CVS, yet in­dus­try-wide salary pres­sures should ne­ces­si­tate price in­creases to pass on in­creased costs. We be­lieve con­cerned pet own­ers should read­ily ac­cept these price in­creases, po­ten­tially boost­ing CVS’ or­ganic rev­enue growth through the year.


Near-term staffing chal­lenges not­with­stand­ing, we’re stay­ing pos­i­tive on this cash-gen­er­a­tive and com­pelling long-term con­sol­i­da­tion story. (JC)

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