Berenberg starts coverage of Telecom Plus at 'buy'
By Michele Maatouk
Date: Thursday 08 May 2025
(Sharecast News) - Berenberg initiated coverage of Telecom Plus on Thursday with a 'buy' rating and 2,600p price target as it argued it was a "gem" that has "fallen through the cracks".
The bank noted that through its Utility Warehouse (UW) brand, the business offers a range of energy, broadband, mobile, insurance and cashback card services to UK households and small businesses.
The company's subscription-style platform acts as a virtual service provider for essential household services for homes in the UK, it said.
"Customers can bundle multiple services together, creating a convenient multi-service offering that can achieve the best savings in the market, while also providing TEP with high value, long-term customers," Berenberg said.
"TEP has successfully grown the business through multiple macro environments and cycles to over 1.1m customers and today is the seventh-largest energy provider in the UK and the largest UK energy provider to have acquired all of its customers organically.
"However, in our view, this unique business is flying under many investors' radars."
Berenberg said its lack of peers means that Telecom Plus it is often incorrectly positioned and valued against other utility providers with much lower growth and return profiles.
"This creates an attractive proposal for investors: a predictable and highly cash-generative/high-return (over 30% ROCE) business with circa 10-15% customer growth per annum, trading in the wrong bucket."
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