Sepura receives Vote of Confidence by Major UK Broker
After only recently announcing it had been formally contracted to supply a TETRA network for New York City Transit (NYCT), Sepura has received another vote of confidence, this time in the form of UK broker Liberum.
Libium believes there are several supportive factors which will drive the critical communications provider’s stock upwards, and has reinstated its ‘buy’ recommendation with a target price of 70p.
Liberum’s Ben Bourne says, “the balance sheet has been repaired, a significant contract to supply New York City Transit was formalised on Friday and earnings equality is set to improve.”
With reference to the balance sheet, Sepura’s shareholders approved a £65mln raise at 35p at the company’s AGM on Friday, which Liberum expects to improve working capital whilst also reducing “the group’s net debt to EBITDA [underlying profits] ratio towards a target of 1.5x”.
However, Bourne predicts that the company’s future success will lie primarily in how well it takes advantage of the North American markets.
The broker expects the deal with New York subway operator NYCT to be the first of many new contract wins across the pond, as “management are generally upbeat about [the] US pipeline”.
The broker says that the North American markets represent “more attractive opportunities” for Sepura, and believes the next big target to be Montreal in Canada.
