Analysts at Berenberg lowered their target price on live streaming technology outfit Vitec from 1,840.0p to 1,590.op on Tuesday but stated the firm had still delivered a “solid recovery” and a “positive outlook” for 2022.
Berenberg said Vitec pulled off a solid performance in 2021, driven by a permanent structural change in the content-creation market and strong end-market recovery.
The German bank said that Vitec now estimates that roughly 75% of its revenue was now exposed to internet-driven photography, subscription platforms and live-streaming, which were all experiencing double-digit growth at present.
However, although Berenberg acknowledged that Vitec’s shares had performed “exceptionally well” throughout the year, it noted that in recent weeks they had pulled back by roughly 20%, leading it to cut its target price but reiterate its ‘buy’ rating on the stock.
“We increase our revenue and adjusted earnings before interest and tax forecasts for full-year 2022 and 2023. We expect net debt will trend towards circa 2.3x by 30 June 2022, from 2.1x. Our price target falls to better reflect higher near-term market risks and peer group multiples. Shares currently trade on a compelling 14x full-year 2023 price-to-earnings ratio and 9x enterprise value/earnings before interest, tax, deprecation and amortisation ratio which offers upside of 34% to Monday’s close,” said Berenberg.
Analysts at Canaccord Genuity cut their target price on software firm Aptitude Software from 845.0p to 670.0p on Tuesday due to reduced margin forecasts and lower multiples amongst its listed peers.
Canaccord, which reiterated its ‘buy’ rating on the stock, said Aptitude’s full-year results were broadly in line with its model, with sales of £59.3m as expected, while adjusted underlying earnings of £10.5m were slightly below forecasts. It also noted that £10.0m in free cash flow had equalled an “impressive” 95% conversion.
Organic software growth, excluding the recently acquired MPP, was 15%, with contractually recurring revenues now constituting 62% of total revenues, something the analysts expect to further increase as the new business is consolidated in 2022.
However, the Canadian bank noted that Aptitude’s UK and global finance automation enterprise software peers had “materially de-rated over the last months” on the back of recent sell-offs in the technology sector and the wider market.
“Reflecting today’s forecast changes puts the shares on an attractive 2.5x 2023E EV/sales, a circa 50% discount to peers. As a consequence of our reduced margin forecasts as well as lower multiples of listed peers we have lowered our target price from 845.0p to 670.0p based on a 5x 2023E EV/Sales multiple as well as the NPV of a ‘return to normalised 20% margins’ scenario in 2025,” said Canaccord.
