Brave Bison (LSE:BBSN) has been described by Cavendish as “highly compelling”, whilst the stockbroker reacted to the digital marketing group's trading update and new acquisition.
This morning, Brave Bison upgraded forecasts and announced the acquisition of London-based consultancy MTM.
The deal, worth an initial £6 million in cash and shares, will add strategy and audience insights expertise to Brave Bison’s business, whose clients include global brands such as Primark, EA Games and Guinness World Records.
A further £6 million could be paid over five years, depending on performance, taking the maximum value to £12 million.
The acquisition is set to more than double pro-forma revenues to £44 million in 2025 and lift underlying earnings before synergies.
Management said expectations for both 2025 and 2026 have been raised following strong trading momentum.
Analysts at Cavendish, the 'house' broker, raised a 12-month price target to 150p, from 120p, citing strong forecast growth.
Brave Bison is expected to deliver net revenue of £44.8 million and adjusted EBITDA of £9.4 million in 2026. That represents year-on-year growth of 42% and 54% respectively. Adjusted basic EPS is expected to rise 20% to 8.35p, with net cash of £0.1 million forecast by year-end.
Cavendish believes the company is undervalued on a price/earnings multiple of 7.8 times, compared with a peer average of 15 times.
The broker noted that MTM isn't Brave Bison's first deal of the year, and highlighted progress seen in the business.
"The integration of the acquisitions so far this year continues at pace, and all are expected to positively contribute to profitability in 2H25E," Cavendish analyst Andrew Renton commented.
"In light of strong trading and the MTM deal, our maiden FY26E represent a 23% uplift to FY25Epf net revenues and 13% uplift to FY25Epf basic adj EPS."