Jefferies | Rovi Laboratories (ROVI), ahead of its CMD (9am UKT), has announced a revenue forecast for FY30E of 1.5-1.8 times FY24 levels, a midpoint of €1.261 billion (up 10% versus estimated JEF €1.144 billion). This growth is driven by the forecast of a two-fold increase in CDMO revenues in 24, to around €700 million in 2030E (up 60% compared to €429 million in 2005). Including the additional €250 million of CDMO revenue in 2030 compared to our current forecast yields an implied multiple against FY24 CDMO revenue of 1.825x, in line with the upper end of the forecast.
We note that the midpoint of the operating income forecasts yields an annual sales growth rate for the FY24-FY30E period of 8.6%, compared to the company’s annual sales growth rate for the FY21-24 period of 6%, driven by the expansion of the CDMO business. The company expects new CDMO contracts from 2026 onwards to drive portfolio growth and diversification. ROVI revealed that signing a new contract takes time, as expected, between 12 and 18 months from signing to commercial production, so we expect the forecasts to be delayed. Revenue growth is brilliant, 1.5-1.8x in sight.
Assessment: We value Rovi using a SOTP DCF crossed with peer multiples for the different areas of the business.
Risks: Competition from new launches, Bemiparin cannibalised by Becat, execution risks at Doria, dependence on partners for unlicensed products.
