New Liberum research - 200p target price17 Oct 2023 11:04
Liberum have just issued a whopping 32 page Buy note on INSE, having raised 2024 and 2025 EPS forecasts by 5% after the recent interims.
They have a 200p target price, with 345p based on DCF,and they forecast 13p EPS this year, rising to 13.7p EPS next year.
They summarise:
"Inspired Plc*
Differentiated model can take advantage of structural tailwinds
The H1 23 results were in line. We make four key points on the business:
1) Inspired has evolved from a Third-Party Intermediary (TPI) in the energy market to a technology enabled services provider;
2) synergies between divisions help cross selling and make Inspired uniquely qualified to help with both sides of the energy equation (cost + consumption);
3) underlying EBITDA is expected to double in 5 years (FY 22 – FY 27), indicating 44% upside to our FY 25 estimate;
4) the business is becoming less reliant on Energy Assurance profits, which helps increase earnings quality. In terms of valuation, a CY 24 P/E of 5.1x is attractive given the growth.
Key points
H1 23 results were in line;
Optimisation was the star performer.
Net debt (exc. leases) increased from £37m at FY 22 to £49m at H1 23.
Contingent consideration being paid.
Value drivers
Scope to grow in newer areas like Optimisation, Software and ESG.
These should accelerate growth and increase the valuation multiple.
Energy crisis drives Optimisation.
What market misses
A £3.6bn CLV is addressable.
Software and ESG will help margins.
Assurance
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