First Berlin – Expedeon AG Research Update (05/12/2018)

First Berlin Equity Research has published a research update on Expedeon AG (ISIN: DE000A1RFM03). Analyst Christian Orquera reiterated his BUY rating and decreased the price target from EUR 2.65 to EUR 2.55.

Expedeon AG's 9M/18 results published on 8 November were mixed. Revenues for 9M/18 came in roughly as expected and increased by 74% to €9.3m, (FBe: €9.4m; 9M/17: €5.3m). However, reported as well as EBITDA adjusted for non-cash items amounted to respectively €136k and €461k, and were both below our estimate of €552k (9M17 adj.: €-1.7m). Reported and adjusted EBIT were also below our expectations. EBIT adjusted for other non-cash items amounted to €-1.3m (FBe: €-0.7m; 9M/17 adj.: €-2.6m). We had estimated that Expedeon's bottom line would benefit more strongly in Q3/18 from consolidation of the TGR acquisition (Q3/18 was the first full quarter of consolidation for TGR). We have fine tuned our FY/18E - FY/21E bottom line projections to account for the post-acquisition cost structure seen in Q3/18. Our new forecasts for FY/18 reported as well as adjusted EBITDA are respectively €0.4m and €1.0m (previously: €1.1m) and are in line with company guidance for positive EBITDA in FY/18. Based on our updated DCF-model, we arrive at a new price target of €2.55 (previously: €2.65). Our rating remains Buy.