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Next Fifteen expands client base despite pandemic

Snapshot

  • +20 digital marketing and communications brands under 1 roof
  • M&S, Samsung and Nike among its customers
  • Pandemic expected to hit but client wins continue
marketing

Quick facts: Next Fifteen Communications Group PLC

Price: 344 GBX

LSE:NFC
Market: LSE
Market Cap: £304.17 m
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What it does

Next Fifteen Communications Group Plc (LON:NFC) is a digital marketing and communications group, and its brands span everything from digital content to PR to market research.

The group's aim is to build a group of specialised companies that can cover a wide range of sectors and geographies, allowing it maximum access to customers and international talent.

The latest additions are DuPont, Google Cloud and O2.

 

How it is doing

Next Fifteen continues to win new work in spite of the coronavirus pandemic, but it anticipates that revenues and profits “will be affected from May” as some clients reduce spending due to the uncertainty.

Around two-thirds of its portfolio are expected to take a hit, with revenues impacted by between 5%-25% depending on sector and specialism. The rest of the portfolio is expected to be largely unaffected.

For the year ended January 31, pre-tax profit rose 12% to £40.2mln, while net revenues climbed 11% to £248.5mln. The dividend was suspended due to the crisis.

 

What the boss says: Richard Eyre, chairman

"Looking to the current financial year, we have not seen a material impact on the Group’s trading performance from Covid-19 to date but are anticipating that our revenues and profits from some of our businesses will be materially affected from May as some clients reduce or delay spend due to the pandemic. On the other hand, we are expecting some businesses to see little or no impact."

"The timing of any recovery is hard to predict and therefore we are managing the business very tightly, whilst being mindful of any post Covid-19 opportunities."

 

Inflexion points

  • No material impact from the crisis until April
  • Expected hit from May onwards
  • Client wins continue

 

Broker estimates

Peel Hunt currently has Next Fifteen pegged with a ‘buy’ rating and a target price of 640p.

"The prospects for Beyond are looking positive for the new fiscal year with new client wins. It is also encouraging that the issues are mainly within these two businesses, with the rest of the group producing strong organic growth," analysts said in a note.

"The acquisition pipeline is active, and management expects to announce the completion of acquisitions in the coming months."

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