Good news11 May 2024 21:35
Liberum encapsulated the relief when it said the declines have stabilised for the business, which has been hard hit by a decline in spending by the tech sector.
"Whilst pockets of recovery are beginning to emerge, due to [S4's] high gross profit exposure to the technology vertical (43% of net revenues), we see it as likely to lag growth recovery at other agencies near-term," the broker said in a note.
"Market recovery seems more localised to areas such as fast-moving consumer goods, pharma and healthcare, which make up 15%-20% of [S4's} net revenues we estimate.
"Longer-term however we continue to the potential for [the company] to move back to organic outperformance as the key technology segment recovers."
Liberum repeated its 'buy' recommendation while increasing its share price target to 85p from 80p.