CVS Group - Trading update: earnings momentum remains excellent

Davy Research
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We are upgrading earnings estimates again for CVS, this time by 6% for FY 21 and FY 22 EPS. Recent momentum across the business remains strong, and further easing of both first opinion and broader economy restrictions has increased management’s confidence in the out-turn for FY 21 (June year-end). CVS remains excellently positioned to deliver very strong organic earnings growth in the coming years. We also remind investors that, with current leverage at just 0.7x net debt/EBITDA, there is very material inorganic earnings optionality from UK market consolidation. In line with our upgrades, we are increasing our price target to £22.5.