Berenberg raises target price on Trustpilot

Analysts at Berenberg raised their target price on consumer review website operator Trustpilot from 385.0p to 430.0p on Tuesday after the firm's "very strong" first-half trading update yesterday.

Berenberg highlighted that Trustpilot delivered constant currency revenue growth of 22% year-on-year and bookings growth of 28%, comfortably ahead of its full-year 2021 run-rate expectations.

The German bank stated that if these trends were to continue, it expects Trustpilot to upgrade the full-year 2021-22 guidance provide at the time of its interim results on 15 September.

"Given our conviction in these underlying trends and the growth potential across all key regions, we upgrade our FY 2021 and FY 2022 revenue forecasts by 3% and 5% respectively, which leads to an increased price target to 430.0p," said Berenberg.

The analysts, who also stood by their 'buy' rating on the stock, pointed out that reacceleration in US revenue and bookings was "a key debate among investors" given the large market opportunity and the competitive landscape.

"While no segmental detail was provided by management, our conversations have suggested there has been an acceleration in US revenue and booking growth, and ongoing positive regional KPI trends in reviews engagement. We believe further disclosure on regional ARR, bookings, revenue and consumer engagement (cumulative number of reviews and monthly unique visitors) could act as a further catalyst for the shares at H1 results," said Berenberg.

"Trustpilot trades on 13.6x FY 2021 EV/sales, falling to 10.7x for FY 2022. We value Trustpilot using a blend of a target FY 2022 EV/sales of 15x (425p), base-case DCF (370p) and bull-case DCF (700p)."