Berenberg raises target price on Gamma Communications

Analysts at Berenberg raised their target price on internet service provider Gamma Communications from 1,900.0p to 2,000.0p on Wednesday, representing a roughly 70% upside to its current share price.

Gamma Communications
09 April 2025 11:17:08

Source: Sharecast

Berenberg said it continues to expect a "substantial upside" to Gamma's shares at the current level, with the stock trading at a 13x price-to-earnings ratio and 8x enterprise value/underlying earnings.

The German bank anticipates Gamma to experience a combination of mid-single-digit organic growth and the option of further value-accretive M&A, as well as "strong future cash generation".

Berenberg also noted that Gamma’s management team has demonstrated that it has "a strong track record" of creating value for shareholders from past earnings-accretive M&A.

"We believe that the shares present a good earnings story as our five-year adjusted EPS CAGR has risen to 11% from 7% previously. Additionally, Gamma’s high FCF generation (c8% FCF yield) and under-levered capital structure provides significant headroom for further value-accretive M&A or additional shareholder distribution," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com

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Date:

23/05/2025 - 17:09

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