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magazineCVS remains a compelling pet project
CVS (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.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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