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 decreased the price target from EUR 4.40 to EUR 3.60.

ad pepper media (APM) has reported preliminary Q3/22 results. Revenue declined 15% y/y to €5.9m and EBITDA 66% to €0.4m. While revenue was in line with guidance and our forecast, EBITDA came in slightly better than expected due to a higher contribution from the Webgains segment (€0.5m versus FBe: €0.2m). This shows that cost cutting had a positive effect on Q3 earnings. For Q4, APM is guiding towards lower revenue y/y and positive EBITDA contributions from all three segments. We expect a weak Q4 due to very low consumer confidence, high inflation, and the looming recession. The adverse macroeconomic environment looks set to persist in 2023. We thus expect companies to cut advertising budgets and expect APM’s 2023 revenue to grow by only 1% y/y. Lower revenue and earnings forecasts and a higher WACC estimate yield a lower price target of €3.60 (previously: €4.40). Given APM’s strong balance sheet, the company will certainly weather the recession, which may offer opportunities if weaker competitors exit the market. We stick to our Buy rating.