Learning Technologies Group PLC's (AIM:LTG, OTC:LTTHF) sale of VectorVMS, a vendor management platform for contingent labour, gives it scope for a share buyback or more M&S, suggests broker Peel Hunt.
Given the current share price rating, the broker sees a buyback as more likely.
LTG has sold Vector to PIXID for US$50 million, which equates to roughly 4 times EV/Sales and 7 times EV/EBIT on a trailing basis, says Peel Hunt.
Management is not expecting growth this year given the challenging environment, but is actively looking at the portfolio to unlock value notes the broker and this is the third disposal of late more sales of non-core assets to come.
Adding the cash post-completion (in July) should flip LTG back into a net cash position this year, Peel Hunt says, while on initial estimates, the disposal is dilutive to 2024 earnings (six months) by 3% and in the full year 2025 by 5%.
Buy with a 110p target is the broker’s investment view.