(Sharecast News) - Analysts at Berenberg raised their target price on video games developer Sumo Group from 190.0p to 270.0p on Thursday following the firm's first "significant" acquisition.
Berenberg pointed out that after waiting patiently for two years, Sumo had made its "first major acquisition", with completion anticipated in October.
This, alongside an "impressive" set of interim figures showing more than 25% organic growth and better-than-expected recruitment and client wins, puts Sumo in "a very good position" for 2021, according to Berenberg.
"Organically, we would be upping our forecasts for FY20 by mid-single digits," said the analysts.
However, after the company's acquisition of Pipeworks, Berenberg raised its 2021 and 2022 earnings per share forecasts by 14 and 22%, respectively.
"Given the equity raise ahead of the acquisition and only a small pro-rata contribution of EBITDA in this current financial year, EPS is unchanged," highlighted the German bank, which reiterated its 'buy' rating on the stock.
"With the stock trading on a circa 15% discount on a one-year forward basis to the sector, we believe now is a good time to enter into a name with a 30% EPS compound annual growth rate."
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