ARTICORE GROUP LIMITED (ATG)
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22/08/2024

3

Hold

$0.58

75.76%

Articore (formerly Redbubble) posted an FY24 result largely in line with Morgans, with the key takeaway in the broker's view being the improved margin profile of its marketplaces given recent optimisation work by management, despite a tougher revenue environment.

While Morgans acknowledges the attractiveness of Articore’s global footprint and vast fulfiller and artist network, the broker notes the recent margin headwinds/customer acquisition cost pressures impacting the business, as well as the flagged softer consumer environment.

Pleasingly, the business has reacted to these challenging operating conditions by implementing cost-out initiatives and marketing spend optimisation.

Rolling forward valuation leads to a target price drop to 58c from 68c. Hold retained.

FORECAST
Morgans forecasts a full year FY25 dividend of 0.00 cents and EPS of minus -3.00 cents.
Morgans forecasts a full year FY26 dividend of 0.00 cents and EPS of minus -1.00 cents.

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27/08/2024

1

Buy

$1.00

203.03%

Articore Group's FY24 result revealed improved adjusted EBITDA of $10m, ahead of Canaccord Genuity's estimates. Revenue was in line with expectations.

The year was a period of stabilisation as the cost base was rejigged. Net cash improved to $37m and provides a buffer  for volatile market conditions, the broker adds.

FY25 guidance is considered "somewhat muted", implying FY25 revenue of around $424m and the business returning to growth. Buy rating and $1 target unchanged.

FORECAST
Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.50 cents.
Canaccord Genuity forecasts a full year FY26 dividend of 0.00 cents and EPS of 1.70 cents.