Analysts at Berenberg hiked their target price on media outfit Next Fifteen Communications from 1,500.0p to 1,600.0p on Wednesday following a “huge contract win” for the firm.
Berenberg said Next Fifteen Communications, which announced that its Mach49 subsidiary had won a five-year innovation consulting contract worth $400.0m over the five fiscal years ending 2027, was now in the midst of “a watershed moment”.
As a result, the German bank increased its full-year 2023-25 sales, underlying earnings and earnings per share forecasts by roughly 9-15%, stating the contract win also illustrated the success of Next15’s transition to a data and technology-led growth consultant in recent years.
“We believe there is still significant upside to our estimates, from both organic growth and further M&A, and view the shares as materially undervalued on 17x P/E and 6% FCF yield for FY 2023E,” said the analysts, who added that they view the ‘buy’-rated firm as a top pick.
Analysts at Canaccord Genuity lowered their target price on corporate restructuring specialists Begbies Traynor from 163.0p to 138.0p on Wednesday to better reflect current market conditions.
Canaccord Genuity said Begbies Traynor’s third-quarter update indicated that its trading performance throughout the period was “broadly in line” with the first half of the year.
The Canadian bank, which has a ‘buy’ rating on the stock, also stated the latest UK insolvency market statistics showed that while the quantum of insolvency appointments had recovered to pre-pandemic levels, administrations, which were typically larger, more complex and involved higher value instructions, still remained “significantly below” pre-pandemic levels.
Given the length of time to the firm’s April year-end, Canaccord said any recovery in larger appointments was more likely to benefit its 2023 earnings than 2022 but added that the removal of the final government support measures for businesses in respect of the Covid-19 pandemic back in March and the “currently challenging economic outlook” should be helpful for improving volumes.
“Our previous forecasts had reflected a stronger recovery in these higher-value instructions than has transpired to date. Therefore, we now forecast adjusted pre-tax profits in FY22E of £17.2m (previous: £18.5m), with the reduction driven largely by business recovery and advisory,” said Canaccord.
Liberum upgraded Dechra Pharmaceuticals to ‘hold’ from ‘sell’ and lifted its price target for the stock to 4,020.0p from 4,000.0p on Wednesday following weakness in the share price.
The broker stated the veterinary pharmaceuticals group delivered “strong” interims on Monday and after incorporating the results, it now expects Dechra to deliver “robust” adjusted earnings per share growth of 7.5% in the 2022 trading year.
Liberum noted the shares were down 29% year-to-date but said Monday’s announcement “should offer support with trading into the second half remaining strong”.
“Market growth is set to normalise in calendar 2022,” Liberum said. “Given this weakening outlook we think the current forward multiple offers fair value and we retire our sell moving to hold.”
