First Berlin – Intershop Communications AG Research Update (03/08/2018)

First Berlin Equity Research has published a research update on Intershop Communications AG (ISIN: DE000A0EPUH1). Analyst Karsten von Blumenthal reiterated his REDUCE rating and decreased the price target from EUR 1.64 to EUR 1.58.

H1 figures were below the previous year's numbers and our forecasts. A sharp decline in license revenues caused Intershop to reduce 2018 guidance. The company now expects 2018 sales to be slightly below last year's level of €35.8m (previously: slightly above) and negative EBIT in the low single-digit euro million range (previously: slightly positive EBIT). We have lowered our forecasts for this and the next year, but leave the 2020 forecast unchanged as the global roll-out of Intershop's e-commerce solution Commerce-as-a-Service (CaaS) on Microsoft's Azure cloud looks set to drive revenues in 2020E, and management maintains its 2020 target of €50m revenues and 5% EBIT margin. An updated DCF model accounting for the lowered forecasts yields a new price target of €1.58 (previously: €1.64). We reiterate our Reduce rating.