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Canaccord Genuity raises target price on System1

Analysts at Canaccord Genuity raised their target price on media outfit System1 Group from 380.0p to 430.0p on Wednesday after dat products made up almost half of the firm’s second-quarter revenues.
Canaccord, which also reiterated its ‘buy’ rating on the stock, noted that System1 group revenues grew 22% to £12.3m in the first half against Covid-19 impacted comparatives, in line with the guidance provided at the time of the company’s annual general meeting trading update.

While it acknowledged that revenues of £5.8m were “sequentially softer” than the £6.5m seen in the first quarter, Canaccord pointed out that automated data products contributed 45% of the mix, compared to just 28% in the first three months of the year.

“We estimate this represents quarter-on-quarter growth of 43% in data product revenues (from £1.8m). Our estimates suggest that data will contribute 50% of H2 revenues (up from 36% in H1) as SYS1 customers increasingly replace ad hoc consultancy with faster and cheaper automated products,” said Canaccord.

“As a result, we see data contributing 44% (£11.8m) of group revenues for FY22E as the opportunity scales.”

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