Investor Presentation Preview: Validating returns, clarifying future growth

Research evidence excerpt

Investor Presentation Preview: Validating returns, clarifying future growth

Barclays | CVS Group PLC

UK outlook – still not easy, but expectations appear appropriately cautious. We do not take

a more constructive view on the UK backdrop. While core veterinary spend remains largely non-

discretionary, we continue to expect pressure in discretionary categories. However, we believe

these challenges are increasingly well understood by investors and adequately reflected in

expectations. Therefore, we expect investor focus at the upcoming presentation to centre less

on near-term UK trading and more on MT growth drivers, including pricing, operational

efficiencies and the acquisition strategy. One potential source of incremental growth is pricing.

Our understanding is that the industry has remained relatively restrained on pricing during the

CMA investigation. With this now concluded, operators may have greater flexibility to utilise

pricing as a growth lever where appropriate.

Forecast Changes- we make modest changes to our forecasts following the refinancing,

£50m buyback and recent Australian acquisitions. For FY26E, EBITDA increases 2% to £141m,

broadly in line with consensus, reflecting the removal of some previously assumed immediate

macro-related disruption from the ME conflict. FY26E EPS benefits from the lower share count

following the buyback. Beyond FY26, we leave our revenue and EBITDA forecasts broadly

unchanged and await clearer guidance at the forthcoming FY trading update and Investor

Presentation. However, our FY27-28E EPS forecasts decrease by 2% and 1%, respectively, as we

reflect financing charges more accurately. While net debt is expected to reduce over time

(assuming no further M&A), interest costs remain higher than previously modelled due to the