Canaccord Genuity hikes target price on Kitwave
Analysts at Canaccord Genuity raised their target price on wholesale business Kitwave from 225.0p to 345.0p on Tuesday, stating a "strong" first half and a solid start to H2 had driven further upgrades to the stock.
Canaccord said Kitwave had delivered "a strong H1 trading performance", with interim results showing "meaningful growth" in both revenues and adjusted underlying earnings, up 52% and 190%, respectively.
The Canadian bank noted that each of the group's three core trading divisions had seen trading levels return to pre-pandemic levels or higher and said the group was carrying "positive momentum" into the second half, with "strong trading" seen across May and June despite ongoing inflationary cost pressures.
"The strong first half outcome, coupled with the positive trading seen across H2 to date, prompts a further significant upgrade to forecasts, the fourth since the IPO last year," said the analysts, who also stood by their 'buy' rating on the stock..
"Our FY22E adjusted EBITDA forecast increases by 21% to £29.4m, with an 18% increase in outer years. FY22E and FY23E forecasts now stand 40% ahead of our original base IPO assumptions, a very strong achievement given the challenging macro backdrop. Adjusted pre-tax profits and adjusted earnings per share upgrades are 39% in FY22E and 30-31% in outer years as finance charges remain largely unchanged."
Canaccord also said it sees scope for the shares to re-rate further following Tuesday's positive update and outlook and continue to believe that the stock's current valuation looks "far too low" given the forecast earnings growth and "considerable further consolidation opportunities" available to the group.
Reporting by Iain Gilbert at Sharecast.com