JP Morgan reckons it might be time to buy Trustpilot Group PLC (LSE:TRST) ahead of its results next week, with the shares down 20% in the past month, underperforming the wider European software sector.
Despite the slide, the American investment bank sees no reason for the underperformance. Trustpilot is growing fast, with earnings expected to rise 31% this year.
The US market, a key focus for management, has been performing strongly, a bullish update in January revealed, to help group bookings rise 23% year over year and annual recurring revenue (ARR) up 21%.
Its shares have had big swings before. In mid-2024, they briefly dropped before rebounding sharply. JP Morgan argues that the current dip is another opportunity to buy in before the stock recovers.
The company is expanding at a healthy pace, with mid-teens revenue growth and improving profit margins. It is also returning cash to shareholders, making it even more attractive.
With full-year results coming on 18th March, JP Morgan is adding the stock to its Positive Catalyst Watch. It sees the potential for a strong earnings beat, positive momentum in the US, and further capital returns.
Analysts are keeping their above-consensus estimates unchanged. They expect Trustpilot’s share price to bounce back as investors take advantage of the current weakness.
JP Morgan believes the market has set the bar too low ahead of the results. If the company delivers as expected, the shares could climb quickly.
The note gave the shares a boost. In early afternoon they were up 2.4% at 276.5p.