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Animalcare in line for double-digit growth ahead, says Panmure Gordon
Animalcare is facing competitive pressures across its current sales mix, but while analysts at Panmure Gordon made some slight revisions to revenue and margin projections, they see strong growth ahead.
Forecast changes included shifting a chunk of EBITDA for 2018 into 2019, but numbers still inferred that the company was "set on delivering double-digit EBITDA growth" over the next two years on its enlarged pan-European platform.
Animalcare released a trading update on Wednesday morning ahead of its preliminary results in May that told investors to expect an estimated 9.5% year-on-year increase in revenues to £91.9m, slightly ahead of both the company and the broker's estimates, with earnings "broadly" in line with management expectations.
In terms of next year, the AIM-quoted group warned that a combination of its sales mix and competitive pressures were expected to negatively impact margins, despite earnings being significantly ahead of the prior year.
This made Panmure analyst Mike Mitchell quite keen to see Animalcare's May prelims to garner "further detail and granularity".
But in terms of his immediate view on numbers, Mitchell forecasts for the 2017-2019 period saw expectations revised upwards for reported total revenues in 2018 to £98.5m from £97.3m but he took a more conservative view on margins.
Still, with a new target price of 365p, a 15% discount to its peer-group derived target price of 429p, the shares remained a 'buy'.