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 4.00 to EUR 3.50.

ad pepper media (APM) has presented surprisingly weak preliminary Q1 revenue & EBITDA. Revenue was down 13% y/y at €5.1m, and EBITDA turned negative (€-328k versus €33k in Q1/22). The main reason for the negative group EBITDA was lower than expected segment EBITDA at the ad agents segment. Given the good Q4/22 figures, we were convinced that APM’s numbers would continue to track upwards. However, in Q1, clients were very reluctant with their bookings and seem to be keeping their powder dry for H2. The weak Q1 figures and cautious Q2 guidance (slight improvement compared to Q1, but revenue below the prior-year figure of €5.9m) cause us to lower our 2023 forecast. Nevertheless, easing inflation, robust salary increases and improving consumer confidence bode well for the German market in H2. However, the UK, which is the Webgains subsidiary’s main market, is still suffering from double-digit inflation and GDP looks set to shrink in 2023. An updated DCF model yields a new price target of €3.50 (previously: €4.00). We confirm our Buy rating.