2025 has been an annus horribilis” for HVO with the stock down >45% YTD. The TU was in line and whilst HVO highlighted a substantial pipeline of opportunities, the weighted orderbook stood at c. £40m, significantly lower than 1H24 of £70m. Headwinds certainly exist but we believe that the issues affecting HVO (and the broader sector) are transitory rather than fundamental. If one can agree with that view, then this summer lull offers an excellent entry point to a stock that has a healthy cash balance, no debt, a diversified pipeline and a new independent chair soon to arrive. The register has evolved, with blue chip names staying the course. The jury remains out on whether Iliad can successfully close it much anticipated financing round and move the LOI into a full HCT contract. If that comes to pass, the stock should get a positive uplift. Operationally the business continues to integrate the recent acquisitions and there were early signs of green shoots in the TU of the team delivering on the diversification strategy. In the medium term we do see headwinds remaining over the HCT pipeline driven by the negative stance on certain vaccines in the US and the depressed biotech financing environment. Nonetheless we take this opportunity to highlight a very good business that has been oversold by external events that are not material to its long-term future. We make no changes to our forecasts but take this opportunity move to BUY.
