Filtronic (FTC) : Corp

AGM told H1 is in line and orders growing YoY

Key data

  • Share price (p) 8.5
  • Target price (p) 10.5
  • Market cap (£m) 17.8
  • Enterprise value (£m) 15.4

It is pleasing to see H1 2020 trading is in line with expectations, with encouraging demand in continuing business lines. H1 orders across the range of public safety, 5G backhaul and defence markets have all improved YoY. To cater for the growing demand, notably in 5G backhaul, £1.0m has been invested in both manufacturing and testing capacity – in addition to the recruitment of engineers to address the new market opportunities particularly in defence and public safety. The Executive Chairman seems to be settling into his new role since the departure of Rob Smith, and there is no further news on the progress of the sale of the telecoms antenna operation. The first instalment of the US$2.0m warranty claim settlement has been paid, with a second due by the end of this month. There are two further instalments next year and the schedule is fully factored into cash planning. We make no changes to forecasts or target price at this stage.

Lorne Daniel 020 7220 0545

STM (STM) : Corp

Growing pains; underlying opportunity remains

Key data

  • Share price (p) 43.3
  • Target price (p) 53.0
  • Market cap (£m) 25.7
  • Enterprise value (£m) 8.4

A number of concurrent revenue and cost pressures result in a downgrade to our revenue and PBT forecasts in the current and forward year. On the revenue side the SIPPs and Trusts businesses have experienced downward pressure and an element of delayed income generation, while costs have increased as a result of a £0.5m increase to Professional Indemnity (PII) cover, as well as a stripping of Carey costs not being realised and one-off increases to IT costs as a result of an initiative to implement efficiencies across the global pensions systems, which all hit the bottom line in 2020E. We move down our target price to be in line with peers on an average P/E of 13x, equating to 53p.

Nik Lysiuk 020 7220 0546

iomart (IOM) : Corp

Investing for meaningful revenue growth

Key data

  • Share price (p) 360.0
  • Target price (p) 450.0
  • Market cap (£m) 391.6
  • Enterprise value (£m) 429.9

Reiterating the October trading update commentary, investment in developing the enterprise focus of the group has led to larger contract wins. While this will benefit 2H20 and underwrite FY21 revenue growth, we trim FY20 and FY21 adj EBIT expectations by 9% and 11% respectively, with additional investment in infrastructure reducing FCF to still strong £11.4m (FY20) and £18.6m (FY21). With bold statements of investment from identification of opportunities, we look forward to proof of organic execution, alongside further acquisitions. Target 450p reiterated.

Andrew Darley 020 7220 0547

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