The group’s 2020 half-year trading update was strong says the German broker with growth and margins ahead of forecasts.
“With a number of growth tailwinds in H2 into FY 2021, positive margin trends and bullish commentary on near-term M&A, we remain positive despite the strong run in the shares,” it added.
Berenberg increased its full-year estimates for profits in the three years 2020/21/22 by 17%/4%/5.3% respectively, while its share price target goes up to 2,250p.
Sales grew by 13% in the first half says Berenberg, of which 8% was organic and well ahead of the broker’s expectations.
Sales should be even better in the second as audio and testing studios reopen after lockdown and the console cycle and the associated game launches.
One constraint is entry-level recruitment, but Berenberg sees this unwinding at the end of this year when Keywords will be able to take advantage of the demand for its services.
Just on a base case, profit growth is likely to be 17% over the next three years but Keywords says it wants to make acquisitions over the coming months and using its £100mln of cash might boost 2021 profit estimates by 20% said the broker.
Buy remains its investment rating. The shares rose 4% to 2,072p.