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(Sharecast News) - Analysts at Berenberg raised their price target on LBG Media to 50p from 45p, saying the group's recent acquisition of Uncovered had strengthened its strategic positioning and supported upgrades to earnings forecasts through FY26-FY28.
Berenberg said the deal, announced on 19 June, boosted the proportion of direct revenues, broadened LBG's client base, enhanced its creative capabilities and improved its value proposition with younger audiences.
The German bank described the acquisition as financially accretive and lifted its earnings per share estimates by 7%, 22% and 21% for FY26-FY28.
Berenberg said the acquisition increases the share of direct revenues to around 83% on a pro‑forma basis, up from 77% in FY26 and 54% in FY25, improving earnings quality and predictability. It added that Uncovered would benefit from LBG's US presence as it scales internationally.
It said the upfront consideration implied an FY26 enterprise value-to-underlying earnings multiple of 6.7x, rising to 8.5x including the earnout, which it viewed as attractive given Uncovered's growth profile.
Berenberg, which reiterated its 'buy' stance on the stock, increased its revenue forecasts by 4%, 17% and 18% for FY26-FY28, and lifted adjusted EBITDA by 8%, 26% and 24%, assuming 50% revenue growth in FY26 and 20% in FY27 with margins held at 26%.
RS Group rallied on Wednesday after Deutsche Bank upgraded the stock to 'buy' from 'hold' and hiked its price target for the stock to 775p from 700p as it said the recovery case was strengthening.
"A prospective end to the Iran war should position European cyclicals for improved performance as confidence in industrial activity rebuilds - we would expect RS to be a beneficiary of this," the bank said. "Our recent caution in respect of spillover risk from the Iran war has not materialised, with demand robust and PMI lead indicators positive."
DB noted that it has historically found that the international manufacturing cycle has explained 2/3 of RS Group's growth given its exposure to short-cycle industrial and MRO (maintenance, repair and operations) demand.
"Based on historical correlation and recent PMIs, our model implies 4% like-for-like growth is now possible for the business in FY27," it said. "The group would also lap some prior-year self-inflicted execution issues through FY27, supporting growth."
