On Friday, Deutsche Bank adjusted its outlook on Auction Technology Group (ATG:LN), reducing the price target to £8.70 from the previous £9.16, while still recommending the stock as a Buy. The firm's analyst highlighted Auction Technology Group's solid performance in the challenging market of 2024, with a 2% increase in underlying revenue and a 3% rise in marketplace revenues. The second half of the year saw a significant improvement in Gross Merchandise Value (GMV) momentum and progress in strategic initiatives.
Auction Technology Group reported annual revenues of $174 million, slightly below Deutsche Bank's estimate of $175.8 million. The company also achieved an improvement in its EBITDA margin during the second half of the year, expecting to report margins between 45% and 46% for the year, which is a slight decrease from the previous guidance of 46%. This margin improvement implies an EBITDA of at least £78.4 million, compared to Deutsche Bank's estimate of £80.8 million. The firm's gearing was reported at 1.5 times at the end of the year, aligning with expectations.
Looking ahead to 2025, Deutsche Bank has adopted a more cautious stance, lowering its revenue growth forecast from 10% to 6% due to the ongoing uncertain market conditions. Despite this adjustment, the firm maintains its EBITDA margin prediction at 45%, which is consistent with the margin modeled for 2024. Consequently, this revision leads to a decrease in the forecasted 2025 revenue from $193 million to $184.4 million and a reduction in EBITDA from $89.5 million to $83.6 million.
The report indicates that while Auction Technology Group has not provided guidance in its recent statement, further details are expected with the full-year results announcement in November. Deutsche Bank's recalibrated expectations reflect a conservative approach to the company's growth prospects amid market uncertainty.
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