UK Regulators Finalize Veterinary Industry Reform Plan, Key Proposals Softened

Investing.com – The UK’s Competition and Markets Authority released its final decision on Tuesday regarding the veterinary industry, with measures that are relatively moderate for large veterinary groups, including Pets at Home Group (LSE:PETS).

The regulatory body’s final ruling is largely consistent with its provisional decision in October, with some measures softened compared to earlier proposals. The prescription drug price cap has been raised from the initial proposal of £16 to £21, while the market average price is around £20.

Key measures to be implemented include: mandatory disclosure of standard service list prices, providing written estimates for treatments exceeding £500, and offering detailed invoices to customers.

The ruling also expands the regulatory powers of the Royal College of Veterinary Surgeons and updates the industry’s regulatory framework.

Jefferies analysts view this outcome as positive for the UK veterinary industry, noting it removes uncertainties that could pressure transactions, mergers and acquisitions, and market sentiment.

The firm maintains a buy rating for Pets at Home, with a target price of 265 pence, representing a 47% upside from the previous day’s closing price of 180.20 pence.

Pets at Home operates approximately 450 stores across the UK, many of which have veterinary clinics and pet grooming salons. The company runs 443 primary veterinary clinics through in-store and independent clinics.

Jefferies values the company using a segment-based approach, applying a 6x multiple to the estimated FY2027 retail business valuation, and using discounted cash flow analysis for the veterinary business, resulting in a group valuation of £1.2 billion.

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