Warpaint London PLC (AIM:W7L) has received an optimistic outlook from RBC Capital Markets following its acquisition of Brand Architekts plc for £13.9 million.
The transaction, set to close by February 2025, is expected to diversify Warpaint's product portfolio and enhance cross-selling opportunities, strengthening its long-term growth potential.
“Brand Architecks has a complementary portfolio of challenger brands,” said RBC analysts.
The company “appears to be a good fit” for Warpaint, they added, “having a portfolio of solution-led brands in the personal care sector, outside of mass colour cosmetics”.
RBC revised its Warpaint forecasts following news of the acquisition, projecting a 10% average annual revenue growth from 2026 onwards.
Earnings are anticipated to become accretive in 2025, with adjusted EBITDA forecasts increasing by 4-6% annually between 2025 and 2028.
Post-acquisition, Warpaint’s 2025 adjusted EBITDA is projected to rise to £31.3 million from the previously estimated £29.9 million.
RBC raised Warpaint’s price target to 700p with an outperform rating from 685p previously because of the acquisition.
Warpaint shares were swapping for 524p at the time of writing.