Source: Sharecast
Berenberg stated that due to client caution in Q2 following Donald Trump's "liberation day" tariff announcement, M&C had downgraded its like-for-like revenue guidance to a mid-single digit decline.
Berenberg noted that due to swift action taken on costs, M&C now expects full-year underlying earnings to be in line with last year, which resulted in an 8% downgrade to its underlying earnings forecast.
However, the German bank also said that with the shares having derated by 13% over the last three months, it believes that the market was already factoring in some of this weakness.
Berenberg said: "We continue to like M&C due to the actions the new management team have taken to improve efficiencies across the group, the focus on improving the mix to higher-growth, higher-margin divisions, and the capital-allocation optionality provided by its improving free cash-flow profile," said Berenberg.
"For its outlook statement, the company notes that it now expects FY25 LFL revenue will be down mid-single digits and is targeting FY25 EBIT to be in line with last year. We now forecast LFL revenue growth of -5% (versus our prior forecast of 2%), and our net revenue forecast falls 8% to £216m."
Berenberg added that M&C currently trades on a full-year price-to-earnings ratio of 9.4x, and a free cash flow yield of 5.5% on its new numbers.
Reporting by Iain Gilbert at Sharecast.com