In this equity report, analysts Henrik Telenius and Daniel Klingberg take a deep-dive into Vertiseit AB. Vertiseit is a Swedish retail tech company, providing digital in-store solutions for their customers primarily active within the retail industry. Our analysts estimate doubled sales from recurring revenue 2019-2022E, combined with high switching costs and a target multiple of 16.0x EV/EBIT in 2022E, indicates a potential upside of 48.3%.
Investment highlights:
- The high switching costs ensure recurring revenue, consequently maintaining a strong growth of 21.6% during 2020E Y-o-Y despite the industry facing a -6.1% setback in sales due to Covid-19.
- The company has excellent expansion opportunities by using their current customer portfolio, including Volvo Cars, Uniqlo and The Absolut Company, resulting in sales CAGR 2019-2022E being 9.0% compared to the median of peers of 8.3%.
- Vertiseit is currently trading at a forward-looking EV/EBIT multiple of 9.1x for 2022E. The target multiple for 2022E is the peer’s average EV/EBIT multiple of 19.9x, adjusted down to 16.0x, because of Vertiseit’s smaller market cap and lower EBIT margin. A target EV/EBIT multiple of 16.0x implies an upside of 48.3% and a target price of SEK 23.4 in 2022E.
