Analysts at RBC Capital Markets has raised their target price on veterinary services provider CVS Group from 2,750.0p to 3,100.0p.
RBC said on Thursday that the primary reason for its price target revision was its assertion that the Competition and Markets Authority was likely to rule in the firm’s favour in regards to its recent acquisition of Quality Pet Care.
The Canadian bank, which has an ‘outperform’ raring on the stock, stated it had researched historical CMA actions to address two key investor concerns – what could be the outcome and impact on CVS from the recent CMA investigation, and what were the wider ramifications of this investigation with respect to the ongoing consolidation of the UK vet market.
“Our proprietary analysis suggests that, at worst, there will be minimal impact for CVS, with divestment of one site. Our work also suggests there is further scope for consolidation in the UK vet market,” said the analysts.
“We see the organic growth remaining the key driver for the investment thesis, and we are confident CVS can continue to outperform the market. We believe there are long-term growth opportunities both in the market and in terms of CVS’ own improving operational capabilities, and we think the fall in share price on the CMA news was an over-reaction.”
