Berenberg lowers target price on Videndum following FY results

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Sharecast News | 01 May, 2024

Analysts at Berenberg lowered their target price on hardware and software manufacturer Videndum from 500.0p to 450.0p on Wednesday following the release of the group's full-year results on 23 April.

Berenberg said Videndum's FY23 results reflected an "annus horribilis" for the group, significantly affected by the US writers and actors' strikes, a "challenging" macroeconomic environment and ongoing de-stocking. Revenue from continuing operations was 31% lower year-on-year at £307.0m, with adjusted operating profits down 81% at £12.8m.

The German bank added that in response to pressure placed on the group's balance sheet, Videndum raised £118.0m of net proceeds via an equity issuance in November, and ended the year on 3.3x net debt/EBITDA leverage.

Berenberg noted that with the strikes ending in November, this, plus easing de-stocking into an improving macroeconomic

environment, should underscore an "attractive recovery trade". However, this was yet to materialise and management flags uncertainty about the shape and pace of a second-half recovery.

"Taking a conservative view on trading from here, we push our EBIT forecasts to the right by one year, resulting in a 30% downgrade to FY24 EBIT," said Berenberg.

"While disappointing, into FY25 Videndum now trades on 8.7x P/E. For a market leader, into a market which undoubtedly will recover given structural demand trends, we think on balance the thesis remains attractive."

Reporting by Iain Gilbert at Sharecast.com

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