Cavendish : Buy with 4.7p price target16 Apr 2025 10:33
After the recent acquisition from and partnership with News Corp, Cavendish have updated their research.
They've slightly raised their PBT, with an accompanying 0.28p EPS, and they have a 4.7p price target.
At 2.55p that's a P/E of only 9.1, but when you take into account the approaching 20% of the m/cap represented by the forecast £5.3m cash pile it's even cheaper.
Cavendish summarise:
"The fourth year of growth and ‘The Fifth’ acquisition Brave Bison has released a strong set of FY24A results, which marked the fourth consecutive year of growth in net revenue and adj PBT, in-line with expectations and the January trading update. In addition, Brave Bison has released a variety of announcements including: 1) The acquisition of News Corp’s UK-based influencer marketing agency, called The Fifth, which will also see News Corp becoming a top 10 shareholder in Brave Bison, 2) confirmation that FY25E trading will be ahead of expectations, 3) a dividend of 0.023p per share (c.1% divi yield) and the first in the company’s history, and 4) a proposed 100:1 share consolidation to be voted on at the AGM. Brave Bison’s valuation looks highly compelling given it trades on an FY1 adj P/E of just 8.1x versus peers on 9.3x, whilst retaining significant net cash and growing net revenues by 20% in FY25E."
"News Corp will remain a key client, become a top 10 shareholder of BBSN, and have committed to a further £200k in on-market share purchases potentially signalling a valuable long-term partnership.
—FY25E changes and valuation:
Following the recent acquisitions of Engage, Builtvisible and The Fifth, we are confident in raising our net revenue forecasts by 18% to £25.5m, and nudge up adj PBT by £0.1m to £3.9m. The acquisitions are likely to contribute positively to profits in the first year, but are partially offset by National Insurance rises from April 2025. Net cash reduces by £4.7m, but remains healthy at £5.3m. Brave Bison’s valuation looks highly compelling given it trades on an FY1 adj P/E of just 8.1x versus peers on 9.3x, whilst retaining significant net cash and growing net revenues by 20% in FY25E."
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