Next Fifteen Communications PLC (LON:NFC) has the potential to double revenues over the next five years, according to an assessment from Berenberg.
The group has already achieved this over the past five years and is in the right place to repeat the trick helped by shifting industry trends, the German broker said, reiterating its 'buy' rating with a target price of 780p.
Next Fifteen should be a beneficiary of the shift towards data/technology-enabled media services, which offer higher underlying growth trends argues.
“This is most clearly shown by the fact that the Data & Analytics and Creative Technology divisions now account for half of the group revenues, up from 30% in 2018.”
Berenberg also says Next15’s client base remains skewed towards technology firms, which are likely to continue to grow their media budgets ahead of the market given their growth outlook.
Better cashflow meanwhile will allow it to target larger acquisitions.
Organic sales growth of 8% annually and a spend of £30mln in additional acquisitions can see annual revenues top £500mln by 2026 the broker predicts.
Margins are also likely to improve with the higher sales, which makes the current valuation a cheap growth story in Berenberg’s opinion.
Shares rose 1% to 676p valuing the business at around £612mln.