Veterinary, windowmaking and pharmaceutical stocks lead the charge.
One of AIM's success stories of the past year — vet services business CVS Group (LSE:CVSG) — was chased to a new record today as investors eyed further benefits from the pet ownership boom.
CVS, which has 497 practices in the UK, Ireland and the Netherlands, looks well-placed for the long term as the lockdown generation of cats and dogs will require more vet visits as they get older.
The company is already seeing a positive impact after revealing today that half-year profits had almost doubled to £14.8 million, with like-for-like revenues up 8.2% in the past eight months.
The momentum has driven shares up by 140% in the year since the start of the first lockdown, giving CVS a market value of £1.4 billion after today's latest 4% rise to 1,957p.
Analysts at Peel Hunt and N+1 Singer believe there's further to go, with both brokers highlighting a price above 2,000p as more than justified based on above average growth prospects and the UK's greater propensity to care for pets.
Peel Hunt increased its earnings per share forecasts for this year and next by 14% and 9% respectively, adding that it expects the company to step up the pace of acquisitions as well as maintain the current level of top-line growth.
The broker has upped its price target to 2,100p, which is based on an enterprise value 17.5 times underlying earnings for the June 2022 financial year. It said today: “We see the company as increasingly attractive, given the stronger growth prospects combined with the broad array of services provided.”
The strong performance boosts the chances that Bristol-based IVC Evidensia, which is Europe’s largest veterinary group with more than 1,500 practices spanning 11 countries, will fire the starting gun on an IPO that could value the business at £10 billion.
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Among other AIM stocks doing well today, Safestyle (LSE:SFE) UK rose 15% at one point after the maker of PVCu replacement windows and doors reported its best quarter for profitability since 2017, driven by an order book 83% larger at the end of 2020 than 2019's closing position.
Despite a £6.2 million loss for last year, the stronger-than-expected performance so far in 2021 means Safestyle should be able to review dividend payments later this year. Shares settled 4%, or 2p, higher at 51p as the company traded back at levels last seen before the pandemic.
Chief executive Mike Gallacher added: “Our intention remains as before the crisis; to build long-term value for shareholders by consolidating our position as the UK's number one choice for replacement windows and doors.”
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The potential roll-out of high throughput Covid-19 testing solutions made Genedrive (LSE:GDR) one of the first diagnostics companies to see its AIM valuation transformed in the pandemic.
The stock surged 3,200% between March and May, but fortunes for the Manchester-based company have been more mixed since. The shares slid 28% today on the back of half-year results highlighting the slow speed of regulatory approvals.
Genedrive said: “In May 2020, approvals were occurring rapidly, but the urgency of regulatory bodies in granting new approvals has subsided. There are no confirmed timelines for these processes, and despite lodging our file claims over summer 2020 we are unable to affect the speed with which our submissions might get reviewed.”
Chief executive David Budd said the company had still made great strides over the past year, with the development of its Covid test portfolio having the potential to support Genedrive over the coming years.
At 84p, the shares are still significantly higher than the 9p seen a year ago. Analysts at finnCap today withdrew its forecasts until there is greater visibility, but said any contract breakthroughs could lead to significant revenues in the near term and have a material impact on valuation.
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