Cavendish : 100p price target, ex-cash P/E only 5.7 for 202515 May 2025 11:39
Cavendish have updated their forecasts to account for the disposal and the ongoing business.
They have a 100p price target.
They forecast 4.2p EPS this year rising to 5.8p EPS next year and then 7.1p EPS.
They also see £32.8m cash pile at the end of this year, rising to £41.1m and then £51.2m - respectively 52%, 65% and 81% of the current £63.3m m/cap.
Cavendish summarise as follows (extracts):
"Pure play consumer healthcare
Venture Life has announced the disposal of its contract development and manufacturing organisation (CDMO) along with some non-core brands. The acquiror, Italian-based BioDue, will pay €62m (c£53m), indicating an EV/Sales multiple of 2.6x, which we believe represents excellent value for Venture Life. Post-sale, Venture Life will become a focused pure play consumer health business, which we expect to deliver revenues of c£43m and EBITDA of c£7.7m in FY25, before re-deployment of proceeds into new opportunities.
The cash consideration will be used to pay down existing debt on completion and strengthen the company’s balance sheet to progress its established M&A strategy. On a continuing basis, we estimate the company will trade on c0.6x sales, at the current market value, which we believe presents an attractive level to acquire shares in the business.
"—Forecasts: Our FY25 onwards forecasts are shown on a ‘locked-box’ basis as of the end of FY24. We expect FY25E revenues of c£43m growing to c£51m in FY27E on an organic basis. We expect highteens EBITDA margins in the near term. By selling the CDMO business, Venture Life’s capital expenditures, leases and finance-related costs will reduce significantly, improving cash conversion. At the current share price, we estimate the FCF yield at c15% for FY26E, before any M&A.
—Valuation: Post-sale, we estimate that VLG will trade at 0.6x EV/Sales and 3.2x EV/EBITDA (FY25E), which are clearly attractive multiples. Our target valuation for the shares is based upon the valuation of Alliance Pharma, and we set our target price to £1 based upon this methodology. —Investment thesis:
Post-sale, Venture Life will have a significantly simplified and more focused business, with a strong balance sheet. Operationally, the sale will reduce the company’s capital expenditures, improving cash conversion, which – along with the consideration – will allow the company to progress its organic and M&A strategies. Recent acquisitions have grown the company such that, along with improved cash flows, we believe the company can utilise its RCF without stretching its leverage ratios. The post-sale acquisition multiples suggest an attractive valuation in our opinion."
Sign In
Follow the stocks
