Hold on to Hyve shares, Liberum says

Stick with Hyve shares as the company emerges from the Covid-19 crisis, Liberum recommended as it initiated coverage of the global events operator.

Before the coronavirus pandemic Hyve's management had transformed it from a business with declining revenue to one that was growing strongly, Liberum said. The company has been hit hard by the Covid-19 crisis but after raising funds it is strongly capitalised to do well as social distancing eases, the broker added.

Liberum analyst Harry Read kicked off coverage of Hyve with a 'hold' recommendation and a 140p price target, just above the publication price of 136p a share.

Read said Hyve has an attractive range of cash-generative, market-leading events and about £50m of debt headroom after its recent equity raising. Earnings upgrades are likely if social distancing measures ease further and Hyve rolls out hosted meetings across its events.

Hosted meetings bring buyers and sellers together at events in 15-minute meetings paid for by the sponsor. Hyve acquired hosting expertise when it bought Groceryshop and Shoptalk in December, Read said. The company will survive until business picks up and it has a talented management team, he added.

Hyve will post a £91m loss in 2020 based on a 54% drop in sales as most shows are cancelled. Visitors and revenue will recover steadily in 2021 but revenue will still be 11% less in 2022 than 2019 because of lower cyclical growth, Read said.

"Even post-lockdown we recognise the challenges of B2B business travel and the potential shift to online meetings but within two years we believe the marketplace and Hyve’s economics will have broadly normalised," Read wrote in a note to clients. "While we are impressed with management’s transformation and encouraged by the scope for earnings upgrades moving forward, the shares look fairly valued in the short term."