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Broker bullish on Be Heard, claims investors are “starting to listen”

Dowgate Capital likes the management team, exposure to the digital marketing space as well as Be Heard’s track record of acquisitions
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Internet advertising overtook traditional ads a couple of years ago and is still growing strongly

City broker Dowgate Capital has repeated its ‘buy’ recommendation for Be Heard Group PLC (LON:BHRD),  claiming that investors are “starting to listen” to the digital marketing specialist’s story.

Be Heard made its debut on AIM back in November following a reverse into Mithril Capital and Dowgate reckons it has everything in place to be a success on the junior market.

“Be Heard benefits from a proven management team with an excellent track record, that is gaining from the synergy value of new acquisitions against the background of a marketing industry entering the next phase of an exciting digital revolution,” said analyst Jason Roberston.

Speaking of management, chairman and founder Peter Scott heads up what Robertson calls a “high calibre” senior team.

Given Scott’s previous successes at WCRS (sold for £3.2bn) and Engine Group (sold for £100mln), the analyst says investors “will be hoping history repeats itself”.

Importantly, Be Heard also gives investors the opportunity to take a stake in the booming digital advertising and marketing space.

Robertson estimates that internet advertising overtook traditional advertising back in 2015, and expects it to represent 60% of the ad market in the near future.

“Be Heard is uniquely positioned as a pure play digital business, seeking to acquire and connect a cluster of best-in-class mid-size agencies,” explains the analyst.

Robertson also notes that Be Heard has a track record of acquiring businesses for reasonable prices, especially when compared to some of its larger peers.

“Be Heard’s first four acquisitions have averaged a multiple of 5-6x EBITDA [underlying earnings].

“This appears cheap when compared to acquisitions made by others that have tended to be in the range of x10 to x22, with mid-size acquisitions and those paying a premium for scale, in the x16-x20 range.”

Robertson has the stock as a ‘buy’ with a price target of 5.2p.

Shares were up 2.5% to 3.95p early on Tuesday afternoon.

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September 11 2017

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