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Numis cranks up target price on accesso after strong first half

House broker Numis has upped its target price from 1,270p to 1,700p, and has suggested that if accesso can land a material new contract it could add three or four quid to the share price.

Roller-coaster
The shares have further to go, according to both Peel Hunt and Numis

The weather was kind to ticketing specialist accesso Technology Group PLC (LON:ACSO) in the first half of the year, boosting an already impressive performance.

It was less compliant in some key markets during July and August but the company, which traditionally does more business in the second half, said it was confident of meeting full year expectations.

Adjusted operating profit, which the board considers a key underlying metric, increased by 212.5% to US$5.0mln from US$1.6mln the year before.

Underlying earnings (EBITDA) in the first half shot up 126% to US$6.1mln from US$2.1mln the year before, while profit before tax was US$2.3mln versus a loss the year before of US$1.1mln.

Revenue grew 23.7% to US$39.7mln from US$32.1mln, as the group celebrated 57 new business wins in the period, while 72 new sites went live in the first half of the year. There were two more days in the reporting period of 2016 than there were in the corresponding period of 2015.

The group said it benefited from a combination of strong trading conditions owing to good weather and high attendances, a geographically diversified business and a high-quality suite of products.

"The first half of 2016 has seen Accesso win new business, extend market leadership and chart a course towards a successful full year,” said executive chairman Tom Burnet.

“We are now a long-term and trusted partner to many of the world's leading attractions operators. This places us in a very exciting position, with operators not simply using our technology but increasingly informing its evolution and even, in some cases, influencing the planning of new attractions.

“The group's strong performance in the first half reflects the work done last year to prepare Accesso for a period of accelerating growth. Although the first half of the year traditionally accounts for less than 40% of full year revenues and July and August have presented challenges with unhelpful weather conditions in some key markets, the early momentum gives the board confidence that the group is on track to meet its expectations for 2016," Burnet added.

As per usual, there is no dividend, with the board maintaining the view that the money is better used investing in the growth of the business. The company, which noted that this year would be the first since 2012 in which results would not be distorted by a recent acquisition, also remains on the look-out for businesses that it can acquire.

The company shrugged off the likely impact of Britain’s decision to leave the European Union, noting that more than 90% of its revenue is generated outside of the UK.

Peel Hunt predicted analysts’ forecasts would nudge up in the wake of this update.

The broker noted that the second half of last year chipped in with two-thirds of annual revenues, so if that pattern is repeated accesso is on course for full-year revenue of around US$115mln, well ahead of Peel Hunt’s forecast of US$101mln.

The stock has been one of the best performers on the market over the last 18 months, pushing the rating to a heady 38 times projected earnings per share for 2017.

“However, we believe that the current rating is only factoring in some of the likely upside to our and market estimates and that the shares remain very attractive, with the company being one of the best positioned technology companies in the UK, in our view,” the broker said.

The broker has a target price of 2,100p.

The group’s house broker, Numis Securities, was caught on the hop by the strong performance, which was much better than it expected, though it did caution against reading too much into that, because of the seasonal nature of the sector accesso operates in.

“Notwithstanding this, we think H1's strength gives a good cushion against the July/August weakness that management indicate some customers suffered due to extreme hot weather in the US,” the broker said.

It is leaving its full-year forecasts unchanged, expressing confidence that the group is strong enough to withstand a weaker summer.

“R&D [research & development] acceleration is a key theme in the numbers; we speculate that such investment implies an increasing pipeline of material new opportunities. The R&D acceleration impacts our near term forecasts on a Numis basis, although has limited longer-term effect. However, our analysis indicates that very broadly, a material additional contract could be worth c.£3-4 on the share price and we think it reasonable to reflect this into our valuation on a 2019 view thus our TP [target price] increases to 1700p from 1270p,” the broker said.

The shares fell 4.6% to 1,529.4p on the results.

-- adds broker comments and share price ---

Quick facts: Accesso Technology Group PLC

Price: 550 GBX

LSE:ACSO
Market: LSE
Market Cap: £226.68 m
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