Peel Hunt has stuck to its 'buy' rating on LBG Media PLC (AIM:LBG), saying the group’s half-year update offered welcome reassurance amid a tough market backdrop for digital advertising stocks.
The broker noted that the company has maintained its full-year guidance for around 10% revenue growth despite wider macro uncertainty, with a strong first half laying the groundwork.
The numbers were solid. Revenue for the six months to March rose 13% to £44 million, while EBITDA climbed 16% to £12 million, lifting the operating margin to just under 28%. Cash generation remained impressive, with net cash up to £33 million.
Direct revenue rose 8%, driven by momentum in the US and strong performance from Betches, its female-focused media brand, which secured its first client worth over $1 million.
Indirect revenues, which include advertising on LBG's own websites and social channels, rose 17% on the back of audience growth to 520 million.
Peel Hunt left this year’s earnings forecast unchanged but nudged estimates for later years slightly lower due to currency headwinds.
Even so, with the shares down more than 30% so far this year and now trading on just 11 times forward earnings, the broker sees value on offer. In its view, social media ad spending should remain resilient, keeping LBG’s growth story intact. The broker reckons the stock is worth 150p.
In late morning trading, the price was almost half that figure at 87.8p (down 2% on the day).