Berenberg lowers target price on Big Technologies

Berenberg said Big Technologies' H124 were primarily affected by the loss of its Columbia contract, with some revenue mix impact and additional investment to drive growth. Big Technologies now expects to deliver results at the lower end of market expectations for adjusted underlying earnings of £27.0m to 29.5m.

"We reduce our sales estimate to £50.0m and our gross margin assumption to 70% (from 72%), resulting in our new adjusted EBITDA of circa £27.0m, in line with guidance. We also lower our FY25 revenue estimate given the MRR rate of £3.9m in June, which equates to an ARR of £46.8m, with the difference relative to our revenue forecast expected to come from new contract wins," said the German Bank.

"We expect that H224 will be the trough due to a full period loss of the Columbia contract and that the company will return to growth in FY25 due to the progress it is making in key geographies, notably the US."

Berenberg also noted that Big Technologies shares trade on a 2025 enterprise value-to-underlying earnings of 7.5x, with net cash representing one-third of its market cap - close to the lowest the shares have traded on since listing in 2021.

Reporting by Iain Gilbert at Sharecast.com