JP Morgan raises target price on Trustpilot

5th Mar 2024 09:49

(Sharecast News) - Analysts at JP Morgan raised their target price on review website operator Trustpilot from 190.0p to 250.0p on Tuesday, stating earnings momentum looked set to continue as the group transitions into a fast-growing free cashflow generator.

JP Morgan stated that since it upgraded Trustpilot to 'overweight' from 'neutral' in February 2023, guidance has been upgraded four times, driving earnings and FCF estimates upward.

"Shares are up ~125% in the last six months and investors we interact with are increasingly focussed on where incremental upside comes from," noted JPM.

The broker reexamined its investment thesis on Trustpilot and took "a refreshed view" on what drives performance from here.

"Looking forward, we see earnings supported by: 1) Further operational leverage to come, driving continued momentum in earnings upgrades; 2) Manageable top-line estimates through 2024; 3) Conservative FCF consensus outlook through 2024, supported by Trustpilot's negative working capital profile; 4) Trustpilot well positioned as a GenAI winner," said JPM.

It also stated it sees valuation support from Trustpilot's ongoing share buyback programme, as well as a continued beat and raise cadence under new management, with a focus on profitable growth, and a supportive bond yield environment.

"We increase our underlying EBITDA estimates ~13-16% and raise our PT to 250p, continuing to see Trustpilot as a unique asset well positioned for multi-year profitable growth (JPMe ~54% FCF CAGR 2023-2026)," concluded JPM.

Reporting by Iain Gilbert at Sharecast.com