Canaccord Genuity initiates coverage on Essensys

(Sharecast News) - Analysts at Canaccord Genuity initiated coverage on digital experience business Essensys with a 'buy' rating and a 41.0p target price on Tuesday as it said the group was looking to scale with strategics. Canaccord Genuity said a new Essensys was now emerging, with a new CEO, CFO, simplified go-to-market strategy, and a new, industry-first product, elumo.

While Canaccord said FY25-26 were "likely to be transition years", but noted the expected improvement in revenue mix and gross margins should return Essensys to profitability and cash generation in FY26.

Despite forecasts for declining FY25-26 revenues, Canaccord Genuity believes the route to cash generation to be underpinned by a "significant improvement" in revenue mix, a reduction in costs following the decommissioning of four of its 13 data centres in H125, and a group reorganisation that "should more than halve" operational expenditure by FY25.

"Essensys appears well-positioned to benefit from changes in the commercial real estate market due to the increasing demand for flexible office spaces and premium tenant experiences," said the Canadian bank.

"Essensys Platform and elumo provide landlords/operators with new monetisation mechanisms and provide greater insight into utilisation, enabling landlords to better predict churn."

Reporting by Iain Gilbert at Sharecast.com