Broker snap: ITE in earnings upgrade cycle

27th Jan 2011 12:48

Exhibitions group ITE has made a strong start to its new financial year, but Singer Capital Markets warns against extrapolating too much from what is traditionally a quiet period for the group.Analyst Johnathan Barrett notes that like for like (LFL) revenue growth of 22% from a year earlier was impressive but was achieved against "very easy" comparative figures.The company has reiterated its revenue growth guidance for the full year of 10% or more, while contracted revenues that account for 68% of expected full year turnover gives "a good level of visibility"."We are encouraged by the booking patterns being seen in the larger shows (particularly the largest Mosbuild) and the degree of strength in local sales. Based on this we believe consensus growth assumptions should drift up to 12% LFL. This implies a c3% profit before tax upgrade," Barrett maintains. "The shares rose strongly yesterday albeit from the lowest levels seen since early December. We think the company remains in an upgrade cycle and that our recovery assumptions are modest," Singer said, as it reiterated its "buy" recommendation and 279p target price.