Edison Investment Research Limited
Edison Investment Research Limited: Edison issues outlook on EQS Group (EQS)
10-Jan-2020 / 12:24 GMT/BST
London, UK, 10 January 2020
Edison issues outlook on EQS Group (EQS)
EQS is making progress on its journey to become a fully embedded provider of
investor relations and compliance platforms and products to corporate
customers. While conversion of sales leads has been slower than initially
hoped, the group returned to EBITDA profitability in Q3 and is set to build
a sustainable business model in markets driven by increasing regulation.
FY19 guidance, revised with the Q3 figures, was for revenue growth of 10-15%
pro-forma (down from 18-25%), taking EUR0.5m off EBITDA. The valuation is
well below a DCF based on targeted growth.
The development stage of the group makes peer-based valuations unhelpful
beyond EV/revenue, where EQS is trading at a significant discount of 66%. As
management publishes medium-term revenue and EBITDA targets to FY25, we have
looked at a reverse DCF, based on a WACC of 8% and terminal growth of 2%.
The current share price suggests the market is sceptical of the revenue
growth target or the EBITDA margin target (or both). Were the group to meet
its ambition of 20% revenue CAGR and margins building to 30% by FY25, the
DCF indicates a share price of EUR113. A 16% CAGR (lower end of guidance)
and EBITDA margin of 25% generates a value of EUR74, around 20% above the
current price.
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Dissemination of a CORPORATE NEWS, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
End of Announcement - EQS News Service
950903 10-Jan-2020
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=610ce98e8dbd735433b241aa01e61b43&application_id=950903&site_id=vwd&application_name=news
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=dc4b6da9609a3fa15934b7007f0912b2&application_id=950903&site_id=vwd&application_name=news
3: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=2d62d350e44141e01d1766d8ed0b3f95&application_id=950903&site_id=vwd&application_name=news
4: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=105fe9be9b5e36892886e5a39d51d4b7&application_id=950903&site_id=vwd&application_name=news
5: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=88c95533002fab2316572f9ef6cf3cc6&application_id=950903&site_id=vwd&application_name=news
6: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=afe662765000a80ab72afd922939c992&application_id=950903&site_id=vwd&application_name=news
7: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=ec2d264fe4f303e2143a2e85c6eaa823&application_id=950903&site_id=vwd&application_name=news
8: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=6b959e4d7ee3c402b931a274d2bbe945&application_id=950903&site_id=vwd&application_name=news
(END) Dow Jones Newswires
January 10, 2020 07:24 ET (12:24 GMT)
