FY24 ahead of expectations In a trading update for the twelve months to end 31 March 2024, ECO Animal Health reports that revenue should be close to £90m; this compares to the March trading update outlook of £88.7m. The Group expects that FY24 (adj.) EBITDA should be in line with the current market consensus expectation of £7.8m (ED estimate was £7.6m). The year-end cash position was approximately £22.0m; we estimated £20.1m. 

Our Fair Value range is 137p-146p, reflecting the potential in the pipeline of products under development, which is backed by the rigour of EAH’s development-to-distribution process. 

The Group highlighted the impact of currency movements during the year, which indicates that, adjusted for exchange rate changes, year-on-year revenue growth would have been over 10%, approximately double that indicated. 

In its 21 March Trading Update (Sustained demand and continuing progress), the Group reported sustained demand for its core Aivlosin® product across its target markets: China, Japan and SE Asia, the Americas and Europe. 

R&D investment maintained 

The Group also noted EBITDA delivery against the background of maintained investment in R&D, the wellspring of future product and revenue streams. Our FY24 estimates include provision for £4.2m of R&D spend for the year. 

As we have noted, EAH has a detailed programme for next-generation product development, from initial research to manufacture and commercial distribution, with six major projects underway to treat diseases in swine and poultry, e.g. Ecovaxxin® MG and Ecovaxxin® MS for avian mycoplasmosis, and Ecovaxxin® PCV2 / Mhp, a pig vaccine. 

FY24 EBITDA (adj.) outlook: £7.8m 

Our prior estimate was for revenue of £87.4m and (adj.) EBITDA of £7.6m; following the Trading Update we have raised our FY24 estimates accordingly, with 5%YoY revenue growth indicating £89.9m for the year. Our (adj.) EBITDA outlook is raised from £7.6m to £7.8m, an 8.6% margin for the year; this compares to 1.9% in H1 and indicates a 13.6% margin in H2. 

At this stage we maintain our FY25 outlook unchanged, ahead of full year FY24 results and commentary.

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