Analysts at Citi are turning bullish on Learning Technologies Group PLC (AIM:LTG, OTC:LTTHF), just not bullish enough to shift upwards from its current ‘neutral’ rating for the London-listed shares.
Instead, for now at least, it is on Citi’s “30-day positive catalyst watch” ahead of an anticipated trading update, scheduled for Thursday 27 July.
Citi analyst Thomas Singlehurst, in a note, said that the market’s view of Learning Technologies may prove to be “unduly cautious” and said there’s still potential for the upcoming trading update to settle some nerves.
“LTG's shares have come under sustained pressure since the full-year results in late April (down c.35%) and while some of this can be attributed to the adverse impact of FX moves on reported forecasts, a greater proportion seems to be attributable to the risk that the group disappoints on underlying earnings trends,” the analyst said in a note.
“On this point, while we do think growth and margin improvement will tilt more to the second half, we think the market is perhaps unduly cautious in the short term, especially given commentary during the AGM in June that new business pipelines remain healthy.”
According to Citi, LTG shares are cheaply priced, trading at “barely” 10x earnings per share this year.
“We think the risk/reward tilts positively into the trading update due on 27/7 and we open a 30-day positive catalyst watch,” Singlehurst said.