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Westminster Group started as ‘buy’ at Seymour Pierce, target price 60p

Last updated: 10:32 02 Nov 2009 GMT, First published: 11:32 02 Nov 2009 GMT

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Broker Seymour Pierce has initiated coverage of Westminster Group PLC (AIM: WSG) with a ‘buy’ recommendation and 60 pence price target, an upside of around 70 percent from its current share price of 35p.

The group is still in an early stage of development and profitability levels are low, the broker said, adding that however, it believes there are many reasons for investing in Westminster.

The group has a strong balance sheet and good visibility for full-year 2009 earnings following the contracts awarded in the first half. Furthermore, the group has an "open quote" bank of £300 million.

“Admittedly this is a large figure when compared with revenues of £5.5m in 2008. Clearly not all open quotes will be converted into contract awards. However this is a good indicator of the scale of the opportunity for Westminster.”

Furthermore, in July Westminster secured a £1.2m convertible loan which provides it with a strong capital base to expand its operations.

“We believe the company to be more resilient than many security groups due to its geographical coverage and the critical nature of its products. We are forecasting increased earnings growth throughout the three years to 2011. We project revenues will reach £9.4m in FY09. We are confident that Westminster will hit our medium term (FY2010) profits targets and will continue to grow at above sector rates beyond that point,” Seymour Pierce added.

Westminster provides software and equipment to the security, defence, fire protection and safety markets worldwide.

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