Berenberg initiates coverage on Big Tech and LBG Media at 'buy'
Analysts at Berenberg initiated coverage on software-as-a-services firm Big Technologies with a 'buy' rating and 320.0p target price on Monday, branding the group as "the big disrupter".
Berenberg stated Big Technologies was a disruptive company that entirely generates revenues from its criminal justice product, Buddi Smart Tag, which provides real-time tracking of monitored offenders on rehabilitative programmes.
With the group taking market share from incumbents that operate on legacy technology by winning long-term government contracts, providing high revenue visibility, and its "good
pricing power" and "less price-sensitive" customer base, Berenberg said Big Technologies was "a good asset to own during inflationary cycles".
"The group is expected to grow its top line and EPS by mid-teens percentages, as per our base case, but there is scope for c70% outperformance of our FY 2024 earnings estimate through a combination of more contract wins and highly accretive M&A in the next 12-15 months," said Berenberg.
Berenberg also started coverage on digital content publisher LBG Media with a 'buy' rating and a 180.0p target price, stating that despite its short history as a public company, it believes that LBG has created "a wide competitive moat".
The German bank praised LBG for its global audience of roughly 264.0m social media followers, its ability to reach 64% of the "highly coveted, yet hard-to-reach" 18-34-year-old demographic in the UK, and its "vertical dominance" in key interest areas.
"This makes it the industry-leading youth publisher, in our view. We believe there is no reason for LBG's audience growth or revenue per user to stagnate in FY 2022-24E, as consensus assumes. Coupled with ample firepower for further M&A, we believe LBG could materially outperform our base-case estimates," concluded the analysts.
Reporting by Iain Gilbert at Sharecast.com