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Berenberg slashes target price on Next Fifteen

By Iain Gilbert

Date: Tuesday 07 Apr 2020

Berenberg slashes target price on Next Fifteen

(Sharecast News) - Analysts at Berenberg slashed their target price on marketing firm Next Fifteen from 630.0p to 420.0p on Tuesday but said the group's current share price more than reflected current headwinds.

Berenberg said that while it was cutting its 2021 full-year earnings per share estimates by 31% to reflect the "likely material impact of the Covid-19 pandemic", it also believes the recent 50% decline in its share price was too severe.

"In our view, Next Fifteen's ongoing shift to more data, analytics and technology-led media services, as well as its end-market skew towards global technology firms, will help the business prove more resilient than the incumbent traditional media agencies," said the analysts.

The German bank stated that with Next Fifteen trading on a trailing full-year 2020 price-to-earnings multiple of roughly 8x, the group was still broadly in line with global media agency-only peers.

Berenberg also highlighted that as the global tech sector accounts for around 55% of sales for Next fifteen, with a heavy skew towards US tech giants such as Google, Facebook, Amazon and IBM, where digital media budgets remained "robust".

"While there is pressure from more cyclical sectors, there is some respite as clients reallocate spend from traditional media, such as live events, outdoor and TV, to digital," added Berenberg, which also reiterated its 'hold' rating on the group.

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