Learning Technologies PLC (LON:LTG) has been upgraded to ‘buy’ by analysts at Peel Hunt after it set out some ambitious new long-term financial goals and completed another acquisition.
Last October, the company said it wanted to double run-rate revenues to £100mln and achieve run-rate underlying earnings (EBIT) in excess of £25mln by the end of 2020.
But helped by the acquisition of PeopleFluent in May, the e-learning specialist achieved those figures with two years to spare.
WATCH: Learning Technologies Group PLC doubles long-term finance targets
“The board's updated ambition is to achieve run-rate revenues of £200mln and run-rate EBIT of at least £55mln by the end of 2021.”
“The successful integration of PeopleFluent announced at the time of our interim results remains on track, which alongside the performance of our other businesses gives the board confidence in the outturn for 2018 and beyond,” said chief executive Jonathan Satchell.
“Today's new strategic goals to 2021 demonstrate our ambition to continue consolidating the high growth corporate e-learning market.”
Peel Hunt said in a note to clients that the “magnitude” of the PeopleFluent addition made it difficult to measure performance against the previous goals, but it was confident that Learning Tech was on track to meet its new ones.
The new goals are significantly ahead of the City broker’s current forecasts: before today’s update it had expected the AIM 100 company to achieve underlying earnings of £38mln on a turnover on £141mln by the end of 2020.
Full ownership of Watershed
In the same statement, Learning Tech revealed it had snapped up the remaining 70% of Watershed Systems shares which it didn’t already own in a deal which could rise up to US$11.6mln.
Watershed is a software-as-a-service (SaaS) business which develops learning analytics and works with “a number” of blue-chip customers.
“I am thrilled that LTG is taking full ownership of Watershed, enabling the group to capitalise on the ability to harness data insights to assess the impact of learning on organisational performance,” said Satchell.
De-rating ‘overdone’
Like most of the market, Learning Tech shares have dipped over the past month or so, but the analysts think the de-rating has been “overdone”.
“We believe LTG will be well placed to take advantage of the expanding global e-learning market,” it said in the research note.
Shares rose 8.1% to 120p on Thursday afternoon, although Peel Hunt reckons they are worth nearer to 180p.
--Updates for share price and analyst comment--