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Investing.com - Deutsche Bank raised its price target on CVS Group Plc. (LON:CVSG) (OTC:CVSGF) to GBP17.00 from GBP15.00 on Tuesday, while maintaining a Buy rating on the veterinary services provider.
The price target increase reflects Deutsche Bank’s assessment of CVS Group’s potential to expand in the Australian veterinary market, valued at approximately $5.7 billion, through strategic acquisitions.
Deutsche Bank estimates CVS could generate over £200 million in acquisition firepower by increasing leverage to 2x (approximately £100 million) and potentially divesting its UK Labs business (worth over £100 million) at higher multiples.
The new price target incorporates a blended approach, with 80% weight given to discounted cash flow analysis (approximately £16 per share) and 20% to merger and acquisition analysis (approximately £20 per share).
Deutsche Bank cited emerging growth opportunities in the UK market, ongoing accretive Australian acquisitions, and the anticipated conclusion of the Competition and Markets Authority process as key factors supporting its Buy rating, noting the shares appear attractive at approximately 8.7x EV/EBITDA.
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