Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, Berenberg began coverage on The Property Franchise Group (NASDAQ:FRG) (TPFG:LN) with a positive outlook, assigning a Buy rating and setting a price target of £5.93. The firm’s analysis points to the company’s substantial growth and financial performance since its initial public offering (IPO) in 2013, highlighting a compound annual growth rate (CAGR) of 29% in revenue and a 22% CAGR in earnings per share (EPS) through to the fiscal year 2024.
The Property Franchise Group is recognized as the UK’s largest multi-brand property franchisor, offering residential franchising and licensing services to more than 1,900 lettings and estate agency businesses across the UK. The company also extends financial services through approximately 300 mortgage advisers.
Berenberg’s assessment suggests that despite the share price increases over the past two years, the current valuation of The Property Franchise Group—with a forward Price/Earnings (P/E) ratio of 13.4 times and an Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) ratio of 9.4 times—does not fully capture the company’s earnings quality. This quality is primarily derived from its focus on lettings, the growth potential in its more cyclical services due to recent and possible future base rate cuts in the UK, and the upside from potential accretive mergers and acquisitions (M&A).
The analyst’s commentary underscores the company’s robust track record of financial delivery and expresses confidence in the company’s growth prospects and earnings potential. The price target of 593 pence represents Berenberg’s expectation for the stock’s future performance based on these factors.
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