Berenberg slightly lowers target price on Marlowe
Analysts at Berenberg slightly lowered their target price on business-critical services and software firm from 720.0p to 710.0p on Tuesday but said the group's divestment of certain Governance, Risk and Compliance software and service assets had left it with a "much cleaner and simpler-to-understand equity story".
Berenberg stated that ahead of its full-year results and the expected completion of the disposal by the end of Q125, it had updated its model to show the group in its continuing form of Compliance Services, which comprises Testing, Inspection and Certification and Occupational Health businesses.
"From here, a story focused on organic growth for the near-term, margin improvement and cash generation should address legacy investor concerns over the model," said the Geran bank, which kept its 'buy' rating on the stock.
"On our new numbers, Marlowe trades on 8.4x EV/EBITDA, which we think is attractive. We move our price target 710p (from 720p), at which point Marlowe would trade on 12.1x EV/EBITDA, to reflect model changes and an updated set of peer multiples."
Reporting by Iain Gilbert at Sharecast.com
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