Research from Berenberg - 320p target27 Jun 2022 09:43
Big Technologies (Big) is a disruptive company that provides SaaS products and services to aid remote personal monitoring for the criminal justice and healthcare markets. Representing almost the entirety of the group’s revenues, the criminal justice product, Buddi Smart Tag, provides real-time tracking of monitored offenders who are on rehabilitative programmes. The group has been taking market share from incumbents that operate on legacy technology by winning long-term government contracts, providing high revenue visibility. Also, Big’s good pricing power and its less price-sensitive customer base make it a good asset to own during inflationary cycles. The group is expected to grow its top line and EPS by mid-teens percentages, as per our base case, but there is scope for c70% outperformance of our FY 2024 earnings estimate through a combination of more contract wins and highly accretive M&A in the next 12-15 months. Taking this into consideration makes the stock’s valuation quite attractive. Hence, we initiate on Big with a Buy rating and a 320p price target.