Berenberg lowers target price on Videndum following FY results

Analysts at Berenberg lowered their target price on hardware and software manufacturer Videndum from 500.0p to 450.0p on Wednesday following the release of the group's full-year results on 23 April.

Berenberg said Videndum's FY23 results reflected an "annus horribilis" for the group, significantly affected by the US writers and actors' strikes, a "challenging" macroeconomic environment and ongoing de-stocking. Revenue from continuing operations was 31% lower year-on-year at £307.0m, with adjusted operating profits down 81% at £12.8m.

The German bank added that in response to pressure placed on the group's balance sheet, Videndum raised £118.0m of net proceeds via an equity issuance in November, and ended the year on 3.3x net debt/EBITDA leverage.

Berenberg noted that with the strikes ending in November, this, plus easing de-stocking into an improving macroeconomic

environment, should underscore an "attractive recovery trade". However, this was yet to materialise and management flags uncertainty about the shape and pace of a second-half recovery.

"Taking a conservative view on trading from here, we push our EBIT forecasts to the right by one year, resulting in a 30% downgrade to FY24 EBIT," said Berenberg.

"While disappointing, into FY25 Videndum now trades on 8.7x P/E. For a market leader, into a market which undoubtedly will recover given structural demand trends, we think on balance the thesis remains attractive."

Reporting by Iain Gilbert at Sharecast.com