Canaccord Genuity reiterates 'buy' rating on Good Energy

20th Sep 2022 09:13

(Sharecast News) - Analysts at Canaccord Genuity reiterated their 'buy' rating on renewable electricity company Good Energy on Tuesday, citing the group's "robust" first-half cash flow and "attractive" outlook.

Canaccord Genuity said Good Energy has reported "solid" first-half trading results, with interim revenues up 57% year-on-year at £108.0m, reflecting a secular move up in energy prices, and net cash balance of £16.0m at the end of June.

The Canadian bank noted that earnings in the first half were down due to the timing of impacts of price increases seen in the UK energy supply market but said it expects to see Good Energy deliver a "much stronger" second half.

"The group remains well-prepared for trading over the winter and is already 90% hedged with greater slack for PPA under-delivery than in winter 20/21," said the analysts, who stood by their 475.0p target price on the stock.

Canaccord also noted that cash flow had remained "robust" in July and August, "comfortably covering" the £3.7m the firm invested in Zap-Map.

"We continue to see our forecasts for Good's supply business as conservative and note the net cash (£16.0m) plus the last traded value of its Zap-Map stake (£14.0m) add up to around 180.0p per share in value, implying the rest of the business - which we currently expect to generate EBITDA of around £7.0m annually - is valued at just £13.0m."

Reporting by Iain Gilbert at Sharecast.com