Stifel is bullish on CentralNic Group PLC (AIM:CNIC) - described as a ‘picks and shovels’ company for the digital age – with a repeat of a ‘buy’ rating pitched with a 286p price target, suggesting more than 100% upside to the current price.
CentralNic this morning told investors that organic growth further accelerated during the fourth quarter of 2021, following the company’s significant investment programme. The company, in a statement, highlighted year-on-year organic revenue growth of 37% for the twelve months ended December 31.
It said it expects to report US$410mln of revenue for the year with earnings (adjusted EBITDA) expected at US$45mln – which would be some 5% ahead of consensus, it added. Such a result represents a 70% and 47% gain respectively compared to 2020’s results.
“CentralNic's strategy is to build scale both through acquisitions and organic growth to maximise the potential of its high recurring revenue, high cash conversion business,” Stifel analyst George O'Connor said in a note.
“From the acquisitions we are witnessing CentralNic add new revenue streams in core and co-related areas. It still has much potential by exploring co-related services in areas like hosting, cybersecurity, privacy, identity management and brand protection. As CentralNic consolidates, it istaking out costs, deploying technology to automate process and so is increasing adj.EBITDA.”
O’Conner cautioned, meanwhile, that the pathway of continued consolidation should not be taken as a given and noted competition in the sector.
In Monday’s statement, CentralNic chief Ben Crawford executive said: “The company has comfortably exceeded the high end of market expectations for the year, which had already been revised upwards repeatedly over the course of the year."
The company is due to release its full year financial results statement on February 28.
In London, CentralNic shares gained close to 6% to trade at US$1.37.