Berenberg raises target price on CentralNic

Berenberg said CentralNic was "a misunderstood business", which looks "very different" now when compared to a few years ago thanks to its newly formed high-growth online marketing business that makes up more than half of the firm today.

In its initiation note in June, Berenberg highlighted the potential for top-line growth to accelerate, driven by online marketing and the sale of value-added services alongside domains.

With CentralNic reporting 20% organic growth in its interim trading update earlier in the week, Berenberg now believes its thesis has started to play out.

"On an annualised basis, the reported top-line numbers were circa 11% ahead of consensus and consequently the stock was up circa 10% on the day and is up circa 20% since our initiation," said the analysts.

"With management confident of delivering revenue for the year well ahead of market expectations, we more than double our organic growth forecast for FY 2021 and raise our price target to 200.0p, which still represents circa 110% upside to the current share price."

The German bank, which stood by its 'buy' rating on the firm, added that it expects the stock to "materially re-rate" if the company consistently outperforms for a few more quarters.