Jefferies raises target price on Volution

Jefferies said the acceleration in organic revenue over December and January was a "particularly pleasing element" of Volution's interim results, as was the strength in UK repair, maintenance improvement market - an area where there was "significant" investor apprehension.

As a result, the analysts raised FY23/FY24/FY25 adjusted underlying earnings estimates by 7%/4%/4%, predominantly on higher revenues and kept its 'buy' recommendation.

Jefferies also said it was now looking for a return of mergers and acquisitions to provide a further catalyst for Volution's share price.

"On our new estimates, Volution trades on calendarised FY24F EV/ EBITA and PER multiples of 10.7x and 14.4x. These are undemanding figures in our view, equating to the average multiples seen since IPO. It is worth noting, that since mid-December, Volution has de-rated against a basket of European peers, with the FY2 EV/EBIT discount moving from 19% to 29%," said Jefferies.

Reporting by Iain Gilbert at Sharecast.com