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Canaccord Genuity raises target price on K3 Capital following acquisitions

Analysts at Canaccord Genuity raised their target price on professional services business K3 Capital from 398.0p to 452.0p on Thursday after the firm made a number of accretive acquisitions.
K3 Capital recently completed an equity fundraising of £10.0m and issued £3.1m consideration shares at a price of 340.0p in order to fund the acquisitions of Knight Corporate Finance and Knight R&D.

Canaccord, which reiterated its ‘buy’ rating on the stock, said both businesses were “high-growth, high-margin businesses” which complemented K3’s existing M&A and tax offerings, respectively.

“Based on conservative growth assumptions, we estimate that the combined acquisitions should be 13.4% and 13.5% earnings enhancing in FY22E (assuming an 11-month contribution) and FY23E, respectively (K3 has a May y/e),” said Canaccord.

“In our view, these proposed acquisitions are consistent with K3’s strategy to build a diversified SME-focussed professional services offering, by acquiring immediately earnings enhancing targets at attractive multiples.”

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