Shearwater Share Price (SWG)

A serial disappointment and ex-growth stock is what Hore should have said if he was telling the truth.

SWG were one of Andrew Hore from iii's five AIM recommendations for 2026.

He's just updated as follows FYI:

Https://www.ii.co.uk/analysis-commentary/five-aim-share-tips-2026-first-half-winners-and-losers-ii539550

"Cybersecurity software and services provider Shearwater Group has been winning new contracts, but the share price has failed to recognise the progress. The latest is a five-year contract extension with a UK telecoms client worth £25 million over the period. This is for packet monitoring, forensic analysis and assurance services.

This contract will underpin the forecast for the year to June 2026. There will be £12.5 million recognised in 2025-26. Pre-tax profit is still forecast to rise from £600,000 (in a 15-month period) to £1.1 million. There was a loss reported at the interim stage.

However, the first cash payment for the latest contract extension will not be collected until after the year end. Despite the change in year end, the company still seems to be dependent on winning contracts at the end of the financial year. Net cash is likely to be lower than expected at £5.6 million at the end of June 2026. That is more than 50% of the current market capitalisation.

A further pre-tax profit improvement to £1.5 million is expected for this year. That is equivalent to less than eight times prospective earnings. The share price has risen on the back of the latest news, but it tends to fall back after a rise. Even so, at some point the underlying value of the business combined with the cash pile should be recognised. Buy."

"At our target price of 90.0p, the shares would trade on 0.4x FY27E sales which we believe is a more suitable reflection of the profitability and future growth of the company."

Just like the last 8 years no doubt !! Gawd help us all.

Here's Cavendish's post £25m contract win update conclusion FYI - for the record again they have a 90p price target.

They forecast historic 4.5p EPS to 30th June just gone, with 5.8p EPS this year - a P/E of 7.5.

Plus there's a £5.6m cash pile - likely £7m in early July including the delayed contract payment - against the £10.4m m/cap:

"Contract win underpins FY26E expectations

Shearwater Group has announced a five-year contract extension with an existing UK-based telecom customer valued at approximately £25m. Of this total, approximately £12.5m will be recognised in FY26, supporting financial expectations for the year. The contract confirms the positive commercial momentum that has been established over the past 12 months, and extends an important commercial relationship with a valued customer. We make no change to our forecasts and we maintain our 90.0p target price

— Contract win in context:

The contract win continues a period of positive commercial momentum for Shearwater, which has most recently included a £1.8m contract to supply a hardware platform for a major UK telecom provider (announced on 29 April 2026) and a £1.3m contract with a telecom provider (announced on 12 March 2026) for solutions including advanced network monitoring. We believe that the evolving cyber-threat environment provides a supportive demand outlook for Shearwater, and recent contract wins highlight the value of the company’s offering to its customers.

— Valuation: At the current share price of 37.0p, the shares trade on FY27E multiples of 0.2x sales, 5.2x adj EBIT and 6.3x P/E with 31% adj dil EPS growth in FY27E.

At our target price of 90.0p, the shares would trade on 0.4x FY27E sales which we believe is a more suitable reflection of the profitability and future growth of the company."

Contract Renewal !!