Barclays has initiated coverage of CVS Group Plc, a prominent British veterinary services provider, with an “equal weight” rating and a price target of 1,340 pence. This assessment comes in light of several challenges the company faces, including sub-cost-of-capital returns from its Australian acquisitions, increasing competitive pressure within the UK market, and a lack of near-term trading visibility.
As of March 19, CVS shares were valued at 1,182 pence. Barclays highlighted that the company’s post-tax returns on capital from acquisitions made in fiscal years 2024 and 2025 are projected at 6.9% and 8.6%, respectively, which fall short of Barclays’ estimated cost of capital of 10.2% and 9.7%. The cohort from fiscal 2026 represented a positive shift, achieving an estimated return of 12.3% against a cost of capital of 9.2%. For the fiscal 2024 acquisitions to succeed in surpassing the cost of capital by the end of the three-year earn-out period, CVS would need to see annual revenue and EBITDA growth rates of 7.3% and 19.4%, vastly exceeding Barclays’ current forecasts of 5.2% and 5.8%.
During the fiscal report for the first half of 2026, management noted that while investments are expected to yield positive returns in the long run, the cost synergies realized so far have not been substantial. The risks associated with execution were exacerbated by the recent departure of Australia managing director Graeme Cramb to competitor Medivet, marking a critical juncture for the company’s expansion efforts.
CVS has previously faced setbacks, notably recording a £20 million loss related to discontinued operations during its exit from the Netherlands and the Republic of Ireland. Additionally, the ongoing investigation by the Competition and Markets Authority (CMA), set to conclude in the spring of 2026, has not indicated any forced divestitures, as per provisional remedies outlined in October 2025. Data from the CMA notes that CVS holds a 9% share in the UK small animal first-opinion practice market, in contrast to IVC Evidensia’s 20%.
Barclays pointed out four key factors that may hinder CVS’s ability to fully leverage acquisition opportunities following the CMA’s investigation: increased regulatory scrutiny, competition from private equity-backed firms, the company’s wholly-owned structure potentially being less appealing to sellers compared to competitor partnership models, and workforce sentiment metrics that, while showing improvement, lag behind industry leaders.
In its analysis, Barclays revealed that VetPartners experienced impressive growth from 2021 to 2024, with revenue climbing at a compound annual rate of 25.6% and EBITDA at 21.1%, operating at a net leverage of 7.2 times. In contrast, CVS’s revenue grew 8.3% and EBITDA 9.3%, operating at a much lower net leverage of 1.3 times during the same period, according to filings from Companies House.
Barclays forecasts adjusted earnings per share for CVS to reach 83.8 pence in fiscal 2026, increasing to 110.4 pence by fiscal 2028. This forecast represents a compound annual growth rate of 11.3% from fiscal 2025’s 80.1 pence, which is slightly below the Bloomberg consensus estimate of 87.4 pence for fiscal 2026.
The 1,340 pence price target is based on a multiple of 16 times fiscal 2026 earnings, which is at a discount to the five-year average of approximately 18 times. Barclays identifies an upside case of 1,570 pence and a downside case of 1,075 pence for the stock.
Additionally, it was revealed that Barclays acts as a liquidity provider for CVS securities and has received non-investment banking compensation from the company over the past twelve months.
