Broker tips: Mattioli Woods, THG
By Iain Gilbert
Date: Tuesday 07 Feb 2023
(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on wealth management firm Mattioli Woods to 830.0p from 850.0p on Tuesday despite the group's "robust" interim results.
Canaccord Genuity reduced its revenue forecasts for Mattioni Woods for 2023-25 by 3-4%, since market uncertainty in the second half continued to result in lower new client numbers year-on-year, as well as having pushed out the timeline for realisations in private equity management.
"We expect ongoing close management of costs, particularly with respect to discretionary spend, to mitigate a lower revenue outlook, resulting in reduction to our adjusted EBITDA forecasts of just 1%," said Canaccord.
However, the Canadian bank stated its valuation methodology remains unchanged, with the analysts ascribing a 20% premium to the long-run peer group one-year forward PE of 14.5x, resulting in a target PE of 17.4x.
"We apply this to our CY23 EPS forecast of 47.7p. Our new TP is therefore 830p (old: 850p). The reduction is due to the slight downgrade in EPS referenced above and overleaf. With 28% upside to our TP and a TSR of 31%," said Canaccord, which also reiterated its 'buy' rating on the stock.
Analysts at Liberum reiterated their 'hold' rating on shares of The Hut Group on Tuesday, stating "cash remains king" for now.
Liberum said THG shares continue to attract investor interest given the "quality of the underlying businesses".
The broker stated that bulls often make the sum-of-the-parts valuation argument, but said it thinks SOTP may not the best way to value THG when weighed against the capital intensity of the group.
"Holding all things equal, we think FCF generation remains central to driving the shares from here on. Even at target margins, THG would generate low FCF yields on the current share price," said Liberum, which also stood by its 55.0p target price on the stock.
"Outlook for trading in 2023 appears tough, but profits recovery and Ingenuity wins could reignite interest. If the group were to split, then material upside to the current valuation exists."
Reporting by Iain Gilbert at Sharecast.com
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