Cvs Share Discussion Threads

[hydrus] 07/12/2017 12:16

Well I've held on so far lol

[lomax99] 07/12/2017 12:12

It may take time, and there may be pullbacks on the way, but this re-rating has quite some way to go.....

[luckymouse] 07/12/2017 10:05

intra bounce

[lomax99] 07/12/2017 08:12

Shares magazine:

Sales growth slowdown triggers CVS share slump

Staffing issues and consumer uncertainty blamed for weak trading update

One of AIM’s most successful stocks has experienced a rare moment of share price weakness. Veterinary services provider CVS (CVSG:AIM) has fallen by 30% in value to 900p in the past week after a slowdown in sales growth, blamed on uncertain economic conditions troubling consumers and a shortage of clinicians in the UK.

It says salaries will now be increased by more than inflation, plus more flexible working hours, in order to attract more veterinary surgeons to work for the company. It will fund these extra costs by putting up its prices.

CVS achieved 4.3% like-for-like sales growth for the four months to 31 October, a slowdown from the levels seen in financial years 2016 and 2017.

Stripping out high growth but lower margin online drugs arm Animed Direct, CVS’s like-for-like growth was a muted 1.5%.

This news has soured CVS’s long run of making money for its shareholders. It had generated 680% total return (share price appreciation plus dividends) in the five years to the eve of its troublesome trading update on 30 November.

The business has historically generated strong cash flows and rising dividends thanks to operating in an industry more resilient than most, since UK animal lovers prioritise spending on the wellbeing of their pets.

While the near-term outlook is less certain, Berenberg reiterates its ‘buy’ rating and £14.50 price target, implying 60% upside over the next 12 months.

The investment bank flags easier year-on-year comparative figures across the rest of the financial year to June 2018, meaning ‘like-for-like growth should accelerate in the second half’. It still forecasts robust 4.8% like-for-like growth this year.

CVS itself says customer loyalty remains high with its healthy pet scheme memberships exhibiting ‘excellent growth’ and providing earnings with some backbone.

Berenberg notes CVS is making strong progress on acquisitions in the UK and Netherlands with its pipeline of deals remaining strong.

It adds: ‘CVS has made further acquisitions in the equine market, where it envisages significant medium-term opportunities given the lack of consolidation and less competition for assets from its main competitors for acquisitions like Independent Vetcare.’

Among the risks to its bullish investment thesis is competition for practices; any increased competition for assets would raise the multiples CVS has to pay on M&A, ‘decreasing the earnings accretion it currently enjoys on acquisitions’.

For the year to June 2018, Berenberg forecasts £315m revenue (2017: £272m) and £38m pre-tax profit, ahead of £335m and £42m respectively in 2019.

On forecast earnings of 46.6p, rising to 51.2p in 2019, CVS’s sharp de-rating leaves the shares selling for less than 20 times forward earnings. (JC)


-------------------------------------

At last nights close the PE's implied are 18.4 and 16.7. The YE 2019 fee growth forecast is somewhat pessimistic, with revenues only climbing £20M/6.3% - bearing in mind they attributed £65.1M of the uplift in YE 30/6/17 revenues to acquisitions, this assumes acquisitions almost come to a halt, can't quite see this myself.

[ewanwhose] 06/12/2017 21:24

There was strong selling from 1500 but then a quick but brief bounce from 1300 before the big drop. I agree it looks like a determined seller but that has got a lot of PIs spooked and selling. We were all buying a company we recognised as quality but if that quality isn't recognised any more it starts to look expensive. I was also concerned by the recent RNS which seemed designed to push the price down.I'm out and not sure what price level I will decide is worth buying back in. It's about when everybody else thinks there is value.

[hydrus] 06/12/2017 21:07

I do wonder if a fund is Panic selling as can't really understand why it's gone so low. It's not that far off having halved from peak.

[r ball] 06/12/2017 19:15

Dechra moving in tandem so it seems.

[gswredland] 06/12/2017 17:28

Yes interesting parallel with GBG alphabet. I have a lot but bought more on dip
This drop seems rather overdone!
Glad I sold a couple of weeks ago but looking to get back in...

[jak1] 06/12/2017 16:27

High PE stocks getting punished...

[hydrus] 06/12/2017 12:11

CVSG looking weak again - I might have to exit if it goes too low and accept the small loss as a penalty for not completing my research first. Haven't had to chance to mull it over properly yet hence the initial small stake.

[lomax99] 06/12/2017 10:47

You might be right Alpha, I am also in GB group. I already had a decent holding in CVSG, and I am adding, as it drops, in progressively larger amounts.

[alphabeta4] 06/12/2017 10:39

I held these until recently and was intrigued when I saw the drop on the statement.

It reminds me of GBG around October last year - a growth share on a chunky pe where a small miss led to c42% off the price, same here equates to 862p. I know it sounds harsh but there must have been a number of fearful distressed sellers here, which IMHO is the ideal situation to be buying in. There was a considerable rebound there (see below) so I couldn't resist a buy at just over £9.

[lomax99] 06/12/2017 10:11

Added again in the 860's.

[par555] 05/12/2017 15:48

itr7 - Well argued post - thank you

DavR0s - Ridiculous generalisation.

[par555] 05/12/2017 15:48

itr7 - Well argued post - thank you

DavR0s - Ridiculous generalisation.

[itr7] 05/12/2017 11:54

Trytotakeiteasy - I think there are a few significant barriers to entry for what CVSG have done - they have taken traditionally very independent practitioners and brought them together in a loose corporate structure to give them more buying power - that isn't easy to do with Vets who are very much used to being their own bosses. The other thing to remember is that there is a shortage of vets in the UK - that isn't going to get any better post brexit - so Vets therefore tend to carve out territories between them - don't set up too near each other - there is no need as they can have a decent catchment area all to themselves. Therefore in order to each CVSGs lunch I would have to a) persuade a load of vets to work together and b) persuade them to set up in an area already serviced by another Vet instead of going to an area where they would have a much more captive audience. Now I don't know if the CVSG price is a fair multiple of earnings etc but I don't see them struggling to make a profit and so there must be a floor on the sp

[davr0s] 04/12/2017 18:34

As I said IC kiss of death

[trytotakeiteasy] 04/12/2017 17:52

wagtailflower - don't you think increased competition could hit them. What about the valuation. There aren't huge barriers to entry for vet chains.

[lomax99] 04/12/2017 17:19

Sold a chunk today and bought them all back at a much lower level (not quite at the bottom), intending to increase my holdings.

Would be nice to see Director(s) adding (other than through options).

[wagtailflower] 04/12/2017 14:16

As a member of the profession and knowing this company well, this seems like a big overreaction/correction to the AGM update. Unlike its competitors CVSG has nicely wrapped up the "veterinary pound" such that revenue remains within the various divisions such as primary practice, referral and laboratory etc. Owners will continue to spend on their animals no matter how much sacrifice they personally may have to make so I see this as a big opportunity to continue adding to my holding.

[davr0s] 01/12/2017 19:29

Well IC tip is the kiss of death

[3rd eye] 01/12/2017 12:19

CVSG IC TIP. CVS continues to acquire at pace, has financial firepower to fund those acquisitions & is expanding its geographic reach. A prime example of an expensive, high quality company being hit hard by a minor set back and we think it presents another buying opportunity.👍;

[martinthebrave] 01/12/2017 12:11

IC TIP UPDATE 1st Dec 2017:

Veterinary group CVS (CVSG) continues to fall this morning after yesterday’s meltdown. The AGM statement - which highlighted slower like-for-like sales growth and a difficulty in recruitment - did not go down well with shareholders. The shares closed down 22 per cent, wiping off all the gains made in the last year. We think this is an enormous overreaction. CVS continues to acquire at pace, has the financial firepower to fund those acquisitions and is in the midst of expanding its geographic reach. This is a prime example of an expensive, high quality company being hit hard by a minor set back and we think it presents another buying opportunity.

[lomax99] 30/11/2017 16:51

Added, again (!)