Canaccord Genuity lowers target price on ATC Group

Analysts at Canaccord Genuity lowered their target price on music company ATC Group from 220.0p to 195.0p on Thursday despite the firm's improved revenue and profit performance.

Canaccord Genuity stated that whilst ATC's stake in livestreaming service Driift had reduced, its acquisition of Dreamstage by Driift and additional investment by global streaming service Deezer positioned Driift "strongly for the future" as the market leader, with the global livestreaming market set for "continued growth" over the coming years.

The Canadian bank updated its forecasts to reflect the de-consolidation of Driift from ATC's accounts, with Driift treated as "an associate" from 1 October onwards. Full-year forecasts were also updated to reflect ATC's investment in Driift across the year-to-date coupled with the additional cost base of Dreamstage.

"Looking to FY23E, we have also taken a slightly more prudent stance on forecasts for the core artist management and development business given the challenging macro backdrop which could impact artist touring activity," said Canaccord, which reiterated its 'buy' rating on the stock.

"That said, we continue to believe that the Group is well positioned to capitalise on many growth opportunities that have been presented from the disruption and market dislocation caused by the pandemic. There is positive momentum within the core artist management and development divisions, and we believe Driift is well capitalised to exploit the forecast growth in livestreaming."

Reporting by Iain Gilbert at Sharecast.com