Canaccord Genuity lowers target price on Restore

22nd Nov 2022 11:05

(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on mission-critical services provider Restore from 645.0p to 590.0p on Tuesday, stating that cost impacts had somewhat offset building momentum.

Canaccord Genuity said Restore's Tuesday morning update "encouragingly" showed momentum in activity levels, with the group continuing to build and win new contracts.

However, Restore also revealed it had seen "significant cost inflation and rising interest expense", as well as a tightening in upstream IT asset rotations which resulted in slower-than-expected sales from its technology division.

"We expect price rises and cost reductions to largely mitigate the impact to EBITDA, while our estimates see adjusted pre-tax profits reduce by 9%/12%/7% FY22E/23E/24E from higher interest costs," said Canaccord, which reiterated its 'buy' rating on the stock.

"Our forecasts continue to suggest double-digit PBT growth (10% CAGR FY21-24E), while we note the M&A pipeline remains strong and expect asset price multiples to fall as a result of the macro environment and rising cost of capital."

Reporting by Iain Gilbert at Sharecast.com