Canaccord Genuity raises target price on K3 Capital following acquisitions

8th Jul 2021 09:46

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on professional services business K3 Capital from 398.0p to 452.0p on Thursday after the firm made a number of accretive acquisitions.
K3 Capital recently completed an equity fundraising of £10.0m and issued £3.1m consideration shares at a price of 340.0p in order to fund the acquisitions of Knight Corporate Finance and Knight R&D.

Canaccord, which reiterated its 'buy' rating on the stock, said both businesses were "high-growth, high-margin businesses" which complemented K3's existing M&A and tax offerings, respectively.

"Based on conservative growth assumptions, we estimate that the combined acquisitions should be 13.4% and 13.5% earnings enhancing in FY22E (assuming an 11-month contribution) and FY23E, respectively (K3 has a May y/e)," said Canaccord.

"In our view, these proposed acquisitions are consistent with K3's strategy to build a diversified SME-focussed professional services offering, by acquiring immediately earnings enhancing targets at attractive multiples."