Shore Capital Markets has revised its financial forecasts for Cornerstone FS PLC (AIM:CSFS) upwards following “another smashing trading update” from the foreign exchange company.
Cornerstone has consistently outperformed expectations, with Monday’s unscheduled trading update indicating a significant surge in revenue and adjusted earnings.
For the year ending December 2023, ShoreCap now forecasts the adjusted EBITDA to more than double, reaching £1 million, marking a substantial increase from previous estimates.
These revisions are primarily driven by Cornerstone's accelerating revenue, which has exceeded market expectations.
ShoreCap noted Cornerstone’s exceptional trading momentum, evidenced by the growing number of active customers and an increase in average transaction values.
This success was attributed to the expansion of the sales team and the broadening of the company’s service offerings, including a wider range of currencies and countries for transactions.
The revised revenue forecast for the fiscal year 2023 stands at £9.2 million, a 13% increase, with a further 6% increase in revenue for 2024, reaching £11.3 million.
Operating leverage is expected to continue, with an improvement in EBITDA margin to approximately 16% in 2024 and around 22% in 2025. The forecasts for cash generation are also significantly higher, with free cash flow per share estimated at 0.9p in 2023, 1.7p in 2024, and 3.8p in 2025.
Despite recent share price volatility, ShoreCap’s fair value estimate of 50p for Cornerstone suggests a substantial potential upside against the 11.5p publication price, reinforcing the broker's bullish stance.