Zak Mir’s Top Pick Special
Recent Significant News:
Fundamental Analysis:
May 29th: Iomart reported that it had doubled full year pre-tax profit and lifted revenue by a third. Boosted by acquisitions, the cloud computing and managed hosting services group revealed pre-tax profit up to £5.8m for the year ended 31 March 2012 from £2.8m the year before. Revenues were up 33% to £33.5m.
At this stage of Iomart’s point in its life cycle — relatively early growth stage — the market is still trying to assess whether there is longevity to its model and whether it is likely to be an acquisition/ merger target. While the premium rating of the company certainly places it squarely in the strong growth sector, it would appear that, unlike other comparable tech situations, we do have relatively long range visibility on both demand and earnings and so bolstering its potential for a takeover.
September 27th: Iomart revealed a strong half year performance and said that it expects full year results will be ahead of current consensus market expectations as revenue and profits in the six months to the end of September 30th were substantially ahead of the comparative period last year. March 26th 2013: Iomart said it expects to report full year EBITDA and profit ahead of market forecasts and remains confident of further growth as a growing number of companies sign up for their online services. It expects to show an adjusted EBITDA of no less than £16.4m for the year to March 31st 2013 compared to £11.2m before, and adjusted pre-tax profit of around £10.6m, up from £6.9m and ahead of market consensus.
I actually believe that the performance called for in the outlook period (13) is probably rather too pedestrian when compared to what may actually pan out. This point was underlined in both the September and March updates from Iomart, with it guiding significantly higher on both occasions after better than expected results. It would not be surprising if Iomart continues to deliver this kind of result, and on this basis the shares should continue to respond accordingly.
May 2013
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