Berenberg lowers target price on Videndum following equity raise

Berenberg said there was a "somewhat unique confluence of short-term pressures" - such as writers' and actors' strikes in the US, original equipment manufacturer de-stocking, and low business and consumer confidence - had weighed heavily on full-year earnings for the group, and affected trading for longer and by more than originally expected.

However, from here, the German bank stated a fixed balance sheet, management action and expectations of end-market recovery into FY24 and FY25 mean that it thinks Videndum's shares look attractive on valuation grounds, leading it to reiterate its 'buy' rating on the stock despite significantly lowering its target price.

"We move our price target to 500.0p (from 1,055.0p), reflective of circa 50% equity dilution from the raise and increased conservatism in our outer-year forecasts, balanced with the now reset balance sheet. While we remain mindful of OEM de-stocking in certain channels and wait for full clarity on the shape and speed of the recovery now that the US strikes have ended, we view Videndum as a longer-term winner into normalising end markets. At our new price target, the shares would trade on 17x FY24 P/E (12.7x EV/EBIT) or 13.5x FY25 P/E (10x EV/EBIT)."

Reporting by Iain Gilbert at Sharecast.com