Genus up 7% after strong trading update; broker reckons there's further to go

Genus PLC's shares rose 7% following a strong trading update for the year ending June 2025, driven by double-digit profit growth in its PIC pig breeding business, a significant £3.7 million milestone payment from FDA approval of its PRRS2 Resistant Pig gene edit, and better-than-expected performance in its ABS cattle genetics segment. The company now projects adjusted profit before tax of at least £72 million, supported by strong cash conversion and reduced leverage. Broker Peel Hunt maintained a 'buy' rating, citing strong progress and a 29% upside to their 3,100p price target.

Analysis

Genus PLC's (LSE:GNS) trading update for the fiscal year ending June 2025 demonstrates strong operational execution and strategic progress, catalyzing a 7% rise in its share price. The company's performance was driven by multiple factors, including double-digit profit growth in its core PIC pig genetics division and better-than-expected results in its ABS cattle genetics segment, which realized £8.5 million in benefits from its Value Acceleration Programme. A key development was the US FDA's approval of the PRRS2 Resistant Pig gene edit, which triggered a material £3.7 million milestone payment. Consequently, Genus has raised its adjusted profit before tax guidance to at least £72 million, or £68 million excluding the non-recurring payment, signaling confidence in its underlying business. The update also highlighted strong cash conversion, which has successfully reduced year-end leverage to below 1.6 times. This positive outlook is echoed by broker Peel Hunt, which reiterated a 'buy' rating with a 3,100p price target, citing the profit growth despite currency headwinds, the landmark US approval, and material progress on royalties in China.

Key Decisions for Investors

• Given the positive earnings revision, key FDA regulatory approval, and strong analyst conviction, investors could consider the current momentum and the 29% upside implied by Peel Hunt's price target.
• It is crucial to evaluate the company's underlying performance by focusing on the sustainable double-digit profit growth in the PIC division, separate from the one-off £3.7 million milestone payment.
• Investors should monitor for further catalysts, including the monetization of the PRRS2 gene-editing technology through the establishment of royalties in China, which could provide the next leg of growth.
• While fundamentals are strong, it is prudent to remain mindful of the noted currency headwinds, which could present a risk to future reported earnings.