(Sharecast News) - Analysts at Berenberg lowered their target price on software and services firm GB Group on Wednesday but stated the stock still represented "a good buying opportunity".
Berenberg stated that having optimised its data collection process, GB Group offered a scalable platform that can automatically apply different workflows depending on the use case - be it during customer onboarding or for ongoing monitoring.
The German bank stated this compounder benefitted from "high revenue visibility", up to roughly 80% of group revenues, good operating leverage and industry tailwinds, and also noted the firm had delivered a roughly 20% earnings per share compound annual growth rate over 2013-21 and about 100% cash conversion.
Following GB's acquisition of Acuant in November at "an expensive multiple", the stock slumped approximately 40%. However, over the medium term, Berenberg said this could turn out to be "a good strategic move" if the revenue synergies it expects from the deal flow through.
"We reduce our price target to 850p to reflect lower peer multiples, however with the stock trading at c27x 2023 P/E, a 10% discount to its five-year average of 30x (excluding the valuation spike during the COVID-19 period), we think now is a good time to start building a position in this company with a multi-year view," said the analysts, who stood by their 'buy' rating on the stock.
Gb Group (GBG)