Liberum stays at 'buy' on Equiniti, hails 'momentum' in business

Analysts at Liberum reiterated their 'buy' recommendation for shares of Equiniti, telling clients that the latest update from the company confirmed he "momentum" in the business.

With Equiniti management having said that 2019 "started well" and that integration of the WFSS operations that it acquired from Wells Fargo was going well, the analysts stuck to their estimates for fiscal year 2019 revenue growth of 5% and for EBITDA to rise by 10%, as well as their projection for net debt at period end.

Liberum also highlighted Equiniti's ability to keep all of the clients who had come up for renewal and its "encouraging" new client wins, including National Grid, Danske Bank and DWF in the UK.

The broker added that: "Encouragingly, the company continues to make progress with its plans to cross-sell services into the North American market, supporting our forecasts for an acceleration of growth in FY19 relative to the rates achieved in 2H18."

Liberum also believed that the roughly 35% discount that the shares were trading on in terms of their price-to-earnings multiple versus peers Computershare and LINK would unwind over the next 18 months, given Equiniti's increasing diversification and on the back of the successful integration of the EQUS assets.

The broker stood by its 290p target on the shares, estimating that the shares were changing hands on a calendar year 2019 P/E multiple of 11.1 against 17.2 for Computershare and 18.2 for LINK.