Source: Sharecast
Zigup - formerly Redde Northgate - rallied as Berenberg initiated coverage of the shares at ‘buy’ and a 550p target price stating the group was "in the driving seat" as it approaches a "major" inflection point.
Berenberg said Zigup has built a fully integrated mobility platform, providing a comprehensive solution across the full vehicle lifecycle for customers in the UK & Ireland and Spain.
The German bank stated Zigup was at "a major cash-generation inflection point", with the firm targeting £200m by FY28. It noted that financial momentum was driven by its "nationwide, unique, integrated platform", which provides "a key strategic advantage" for capturing significant market share in a fragmented industry.
"Zigup is approaching an inflection point in cash generation, driven by EBITDA growth, normalising fleet replacement capex, and the exit from a heavy investment cycle, all converging to drive a step-change in potential FCF," said Berenberg.
"Combined with £20m of restructuring savings, the business is targeting cash generation of £200m by FY28. This opens up compelling capital allocation opportunities for further investment in growth or additional shareholder returns through buybacks, in addition to a favourable dividend yield (c6.7% in FY26E)."
Berenberg added that Zigup currently trades on a FY26 price-to-earnings ratio of 7.6x, or 9.5x enterprise value to EBIT. Its 550p price target also implies roughly 35% upside to its current share price.
Workspace was weaker after saying it had rejected a proposal by activist investor Saba Capital to wind down the company over a 12-month period to address the discount to net asset value.
The office space provider also said it had received a shareholder request from Saba - which owns a stake of about 18.2% - to make changes to the board at the annual general meeting in July. Saba is calling for the removal of five of the current non-executive directors and the appointment of four new non-executive directors. Adding pressure was a downgrade to ‘underweight’ from ‘overweight’ at Barclays.
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