US stock futures edge lower after S&P 500 hits record high; PCE data in focus
Investing.com -- Jefferies initiated coverage on International Workplace Group Plc (LON:IWG), the leader in flexible office space, with a Buy rating on Monday.
The firm is optimistic about IWG’s growth trajectory, forecasting a compound annual growth rate (CAGR) of approximately 40% in divisional EBITDA through fiscal year 2027.
IWG shares were trading 2.2% higher in Monday morning trade.
This growth is expected as IWG transitions to a capital-light model through its Managed & Franchise assets.
IWG is positioned to benefit from the mid-term structural opportunities in the flexible workspace sector.
Trends in hybrid working and the demand for flexibility and cost-efficiency in office solutions are anticipated to support market growth.
Jefferies notes that IWG is at an inflection point, accelerating the expansion of its Managed & Franchise division, which could account for nearly half of the expected EBITDA growth by FY27e.
The financial services firm anticipates that IWG’s capital expenditure will reduce further as the Managed & Franchise segment grows.
Jefferies estimates that over $400 million in excess capital could be returned to IWG shareholders between FY25 and FY27, in addition to dividends.
The company’s shares are currently trading at approximately 5 times EV/EBITDA for FY25, which is below historical averages.
Jefferies believes that a consistent operational delivery and an increase in FCF, along with potential further buy-back announcements, could lead to a re-rating of IWG shares.
The firm has set a price target of 240p for IWG stock, based on an average of their Sum-of-the-Parts (SoTP) and Discounted Cash Flow (DCF) valuation methods.