Stifel has downgraded GB Group PLC (LSE:GBG) to 'hold', citing persistent sluggishness in its US business and a lack of near-term catalysts to drive growth.
The identity verification specialist delivered full-year results broadly in line with April’s trading update, with 3% revenue growth at constant currency and an adjusted operating margin of 23.7%.
Strong cash generation was a bright spot. But, as Stifel notes, “we're still waiting for signs of a top-line acceleration.”
The US remains the key sticking point. Despite targeted investment, new leadership and bolstered sales efforts, revenues from the Americas Identity division were flat year-on-year. This lack of momentum prompted Stifel to describe the US as the “key swing factor in the growth story.”
While earnings forecasts remain largely unchanged, Stifel has shaved 0.5 and 1 percentage point off its FY26 and FY27 identity growth estimates, respectively and has lowered its long-term growth assumptions. As a result, the broker has cut its target price to 265p from 315p.
Stifel still regards GBG as a “high-quality competitor” in the digital ID space, but says it is waiting for “a pick-up in momentum, particularly in the US” before getting more bullish.
The shares were off 1.5% at 239.85p and have fallen 12% in the last week.