Pathos Communications Plc (LSE:NEWS) secured a higher Cavendish price target as stronger sales lifted 2027 earnings forecasts, despite unchanged adjusted profit estimates for 2026.
Shares were unchanged at 26p despite the broker's 'buy' recommendation and increased 12-month target of 50p, from 42p, suggesting 92% potential upside.
Behind the upgrade, first-half revenue rose 14% to $7.3 million, prompting a 7% increase in financial year 2026 sales forecasts to $15 million.
But lower gross margin assumptions and increased sales investment left all financial year 2026 adjusted profit forecasts unchanged, including EBITDA at $4 million.
For financial year 2027, the analysts lifted revenue forecasts 7% to $16.5 million and adjusted earnings per share estimates 7% to 4.3 cents, anticipating benefits from greater scale.
Supporting those forecasts, a reorganised sales team lifted June client sign-ups by about 30% month on month, with July delivering record revenue.
Alongside new business, repeat customers generated 36% of first-half revenue, against 16% a year earlier, strengthening revenue visibility for the public relations technology company.
On valuation, the note puts Pathos on a financial year 2027 adjusted P/E of 8.3 times, against 12.4 times for UK technology platform peers, despite faster growth.
The next catalyst is general availability for Pressella and PathosMind, expected in the first half of 2027, with potential operating upside not included in current forecasts.
