RBC Capital starts Marlowe at ‘outperform’

RBC Capital Markets initiated coverage of Marlowe on Wednesday with an ‘outperform’ rating and 630p price target.

It noted that following the sale of its software & services assets on 22 February for £430m, Marlowe’s stock rebounded by around 18%, reflecting "a slight reversal of investor sentiment".

However, the shares are still trading at a significant discount to peers.

"We believe the remaining underlying business is solid with annual organic growth of 5% and margins of 12-14% and efficiencies should drive further margin improvement by 1-2% by F2027E," RBC said.

"With the new CEO search underway, the short-term business strategy is intact. We expect the acquisition strategy will return longer term, but at a more moderate pace."