Canaccord Genuity remains positive on Begbies Traynor

Analysts at Canaccord Genuity slightly lowered their target price on corporate restructuring specialist Begbies Traynor from 170.0p to 163.0p on Tuesday despite the firm beating expectations in both of its divisions.

Canaccord noted that group revenue was 7% ahead of its forecasts and 19% stronger year-on-year, comprising 13% acquired and 6% organic growth, while adjusted pre-tax profits were 10% ahead of expectations, leaving the group with a net cash position of £3.0m at year-end.

The analysts also highlighted that dividends were in line with its forecast of 3.0p and Begbies' outlook indicated that positive momentum from year-end had continued into the current financial year.

"This gives us confidence in our adjusted profit-before tax forecasts, which are unchanged, being at least achieved," said Canaccord.

The Canadian bank, which reiterated its 'buy' rating on the stock, stated that it now expects "further clarity" on market conditions and activity levels "as the year unfolds", particularly in regards to insolvency appointments as government support measures for business are projected to be withdrawn towards the end of 2021.

"For this reason, the company expects FY22 results to be H2 weighted. However, given that we forecast just 5% organic revenue growth for both divisions in FY22, we believe the risk remains to the upside," said Canaccord.