Allenby Capital has initiated coverage of RentGuarantor (RGG ) with a DCF-derived fair value of 42p, implying a 53% upside to the last closing price of 27.5p. The broker highlights rapid revenue growth, a large underpenetrated market and a clear pathway to maiden profit in FY26.
Allenby notes an addressable UK rent guarantee market of about 0.94 million contracts in 2023 rising to 1.03 million by 2030, with RentGuarantor’s penetration still below 1%. H1 FY25 revenue rose 87% to £0.97 million with gross margin around 82%, supported by partner expansion across agents, councils, student housing providers and charities, and limited direct competition. Upcoming renters’ protection legislation could add a structural tailwind.
Allenby noted that the company’s share price has been flat over the past one- and three-month periods and has declined 1% over the past year. During the last one year, RentGuarantor reported a 72% topline growth for FY24 and an 87% growth in H1 FY25.
Allenby’s forecasts point to revenue of £2.2 million in FY25 and £3.4 million in FY26, with G&A up 18% in both years as the company invests in technology, marketing and senior hires. Adjusted net loss is expected to narrow to £0.45 million in FY25 before a maiden adjusted net profit of £0.17 million in FY26, while gross margin is modelled at 79.3% in both years.
Valuation is based on a DCF using an 11.3% WACC and 3% long term growth, giving 42p per share and a sensitivity range of 32.3p to 58.3p. On trading multiples the shares sit at 15.6x FY25 EV to revenue, falling to 9.9x in FY26 as scale improves. Allenby also notes the recent move to AIM which may aid liquidity.