Learning Technologies showed good cash generation in 2023, according to analysts, though the cautious tone for the current year means numbers are likely to be flat.
LTG said it expects same again revenues (after disposals) but improving underlying profits EBIT.
“On our initial estimates, we expect to trim both FY24E revenues and EBIT by 1-2%,” said Peel Hunt.
“With the recent challenges, management has concluded that the previous 2025 targets of £850m revenue and £175m EBIT are no longer appropriate.”
“At 10x FY24E PE, we believe LTG remains undervalued, given that 73% of revenues come from SaaS and long-term contracts. Group cash conversion is also very strong. “However, we believe any re-rating would require positive top-line momentum, which could be supported as the macro improves.”
Panmure Gordon added that debt reduction was the highlight of the numbers, with good cash generation continuing in the current year.
Dropping the run rate revenue/EBIT targets also suggests a major M&A Deal is off the table, which is arguably a good thing said the broker.
Buy with a 120p target is its view.