Peel Hunt, Shore upbeat on musicMagpie

Peel Hunt and Shore Capital were upbeat about musicMagpie’s prospects as the brokers started coverage of the gadget recycler after its listing.
MusicMagpie refurbishes and sell smartphones, tablets, consoles and other electronic products. It raised £15m in a share offer in April, valuing the company at £208m. Both brokers pointed out the company’s growth prospects and barriers to competition.

Peel Hunt advised investors to ‘buy’ the shares and set a price target of 233p. Analyst James Lockyer said the market was expanding by 15% a year to 2024 – faster than equipment makers such as Apple and with better green credentials.

“Its strong brand trust is both a differentiator and the moat [against competition],” Lockyer wrote in a note to clients.

Shore, the company’s house broker, said musicMagpie had environmental credentials, a proprietary technology platform and a growing list of alliances, including with Apple. The broker predicted a three-year compound annual growth rate of 19.8% with earnings per share building and a debt-free balance sheet.

“After a period of considerable development and investment, we forecast strong ongoing financial returns,” analyst Clive Black wrote in a note to clients. “Overall, we see musicMagpie as having very high barriers to entry, as a result of its key people, business model, markets, ESG credentials, technology platform and financial prospects.”

MusicMagpie shares fell 0.4% to 190.30p at 13:20 BST.

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