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(Alliance News) - Peel Hunt thinks there is more to come from 4imprint Group PLC despite its "stellar" performance with shares up more than 40-fold since 2010.
Shares in 4imprint Group rose 2.8% to 5,820 pence each in London on Monday.
In a research note, analyst Jessica Pok pointed out that including dividends, the total return is more than 70 times in the period.
But despite this, Pok explained 4Imprint only holds a modest 5% share of its market.
"We see plenty of room for growth as the awareness of its brand continues to expand, supported by a robust marketing strategy," the analyst said.
Pok pointed out the addition of brand marketing since 2018 has yielded significant results, evident in the step-up in operating margin from 6% in 2019 to 10% in 2023.
She anticipates that 4imprint’s brand value will continue to rise, providing a solid foundation for further growth while maintaining margins.
The Peel Hunt analyst also sees an opportunity for higher returns to shareholders, with the business now bigger in size than ever and cash accumulating more rapidly.
"We believe that up to USD140 million can be returned in the next two years," Pok said.
She suggested given the pace at which cash reserves are building-up, there is a high possibility of even more substantial returns to shareholders, especially given the limited capital needs of the company.
Peel Hunt reiterated a 'buy rating but raised its share price target to 7,500p from 6,650p.
4Imprint reports full-year results on Wednesday.
By Jeremy Cutler, Alliance News reporter
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