Berenberg lowers Trustpilot target price on revised valuation model

(Sharecast News) - Analysts at Berenberg reduced their target price on reviews website operator Trustpilot from 420p to 300p on Tuesday following the company's interim results. Berenberg said Trustpilot's first-half results showed that it had delivered "strong profitability and cash generation" in the six months ended 30 June, as well as another upgrade to its FY25 adjusted underlying earnings margin guidance.

The German bank stated that Trustpilot had shown that it has made progress across its financial and operational KPIs, as it continues to demonstrate the efficacy of its product offering to larger organisations, with recent enterprise customer wins including Barclays, Boots, Amundi, Lindt and Experian.

As such, Berenberg, which has a 'buy' rating on the stock, upgraded its adjusted EBITDA forecasts by 9% each for FY25, FY26 and FY27, primarily reflecting increased margin expectations," said Berenberg.

Berenberg also highlighted that while it had reduced its price target on the stock, this was a result of "a more prudent valuation methodology", rather than any decline in Trustpilot's business prospects, which it believes "remain strong".

"While we upgrade our adjusted EBITDA estimates by 9% in each of FY25, FY26 and FY27, we also refresh our DCF valuation model, increasing our WACC to 10.9% (previously 8.0%), which we think is a more suitable level for a business of Trustpilot's maturity and risk profile," concluded Berenberg.

Reporting by Iain Gilbert at Sharecast.com