City broker N+1 Singer has kicked off its coverage of Lombard Risk Management plc (LON:LRM) with a ‘buy’ recommendation.
The risk management and collateral solutions provider is halfway through a two-year plan which analyst Adam Lawson notes has already delivered a “step change” in revenue performance.
READ: Lombard Risk Management unlocking revenue
Lawson adds that the plan has also accelerated the delivery of key new products and has resulted in the “creation of a world class development centre” in Birmingham.
On the financial side of things, he expects “comfortable” double-digit revenue growth and a return to cash profitability “over the next few years”.
“This will be delivered by new product sales, partnerships successes and cost management,” he says.
READ: Lombard Risk announces another industry collaboration
“In our view, the current valuation fails to reflect this positive outlook, good revenue visibility and reduced earnings risk.
“We initiate our coverage with a ‘buy’ and 16p target price.”
Lombard shares added 0.8% to 10.83p in mid-morning trade on Monday.