Plays update: Iomart Iomart (IOM:AIM) 230p Shareholders in managed services data centre operator Iomart (IOM:AIM) might be a little perturbed by Host Europe’s decision to walk away from takeover talks given this week’s 12.5% share price slump to 230p. But that would be very short-termist. Our original Play of the Week at 245p (3 April) made the long-run investment case, and we stick firmly to our guns now that management can get on with the day job without distraction. Play update IOM Many in the City are puzzled by the share price weakness for much of 2014 but, as we did on 31 July, we remind readers of Iomart’s consistent buy-and-build growth, 49% earnings before interest, tax, depreciation and amortisation (EBITDA) margins, and 90%-odd recurring revenues. Management’s confidence in meeting expectations this year is another plus implying 21% revenue and 24% EBITDA growth to £67.2 million and £29.2 million respectively. We believe medium to long-term shareholders will be left laughing last, and longest. We continue to see long-term upside potential in the stock with perhaps 350p or 400p not an unrealistic target.
Take a 5 week free trial and look at Iomart - the figures are good - hence the speculative offers which clearly undercut the actual value of the stock.
You could drop your average by buying at current price if you feel that there is upside to be had from this level. As always, DYOR.
Nice entry point
Been watching this for ages and finally been gifted the golden ticket, got in at 225. This is an unpresidented drop, over reaction. GL DT
Agree 300 was a bit of a cheap shot but as we are probably headed close to 200, I wonder whether I should have sold my small holding at the 280 level ??? I bought in a year ago at over 300....
Shares Mag - July 14 - good buy
Managed services data centre operator Iomart (IOM:AIM) surprised the market last week by admitting to receiving two takeover offers, one at 275p per share, then another at 285p. We are not in the least bit shocked that management wasted no time in firmly rejecting both bids and believe that a far higher offer is required to tempt shareholders. A Shares Play of the Week most recently 3 April at 245p, we remind readers to consider Iomart’s consistent buy-and-build growth, 49% earnings before interest, tax, depreciation and amortisation (EBITDA) margins, and 90%-odd recurring revenues. Management took money off the table last year 1 October 2013 at 275p via a placing, and analysts agree that to giving those investors a reasonable return must be a bare minimum from any takeover. That the share price has budged less than 10% since the announcement shows that a successful bid is unlikely, but you never know. We continue to see long-term upside potential in the stock with perhaps 350p or 400p not out of the question, assuming management is allowed to get on with its day job. (SF)
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