First Berlin – ad pepper media International N.V. Research Update (22/11/2021)

First Berlin Equity Research has published a research update on ad pepper media International N.V. (ISIN: NL0000238145). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and maintained his EUR 8.10 price target.

Abstract
ad pepper media (APM) has published its Q3 report. Final Q3 figures matched preliminary numbers. Despite higher revenue (+17% y/y) and gross profit (+16% y/y), Q3 EBIT fell 26% y/y to €895k and net income was down 38% y/y at €556k due mainly to higher S&M and G&A costs. APM increased staff by 7% y/y to 246 employees and has invested in the expansion of its international business. We believe that the investments in human resources and internationalisation will pay off next year and expect 11% revenue and almost 35% EBITDA growth in 2022. For Q4/21, management has issued revenue guidance of up to €8m. We expect Q4 revenue of €7.8m and EBITDA of €2.0m driven by the Webgains segment benefitting from the digital Christmas business. Given the strength of the fourth pandemic wave in many countries we believe that e-commerce shopping (and thus digital advertising) is appealing for many customers even without lockdowns. Based on unchanged forecasts we stick to our Buy rating and €8.10 price target. Recent share price weakness results in increased upside potential of more than 60% to our DCF-based price target. A 2022E EV/EBITDA of 10x also suggests an attractive valuation for a growth stock with a rock-solid balance sheet and strong free cash flow generation.