Berenberg lowered its target price on marketing conglomerate Next 15 Group plc from 580p to 510p on Wednesday following the group's capital markets day on 28 January, which it said provided clarity on the strategic direction of the business under its new management team.
Berenberg said Next 15's medium-term target of 50% AOP growth from "Track 1" businesses was "ambitious, but achievable" in its view, given the six businesses in Track 1 were all in structural growth markets.
The German bank, which has a 'buy' rating on the stock, stated transparency from new divisional reporting should help the market value Next 15 better, and it still sees potential for a re-rating.
"We decrease our FY27 adjusted operating forecasts by c7% to account for asset disposals and the increased investment in key businesses, partly offset by cost efficiencies. As a result, our price target falls to 510p, which still indicates 45% upside," said Berenberg.
"The shares trade on a FY27E of 7.8x, and an EV/EBITDA of 6.0x, with the Mach49 arbitration, set for March, weighing on the valuation."
Reporting by Iain Gilbert at Sharecast.com