NRC Group (Buy, TP: NOK20.00) - More time seems to be needed
We have cut our forecasts again, as we believe margins will not recover as fast as we had expected. Having pushed the recovery out in time, we have cut our EPS by 37% in 2023e, 17% in 2024e, and 10% in 2025e. The Q1 results, due at 07:00 CET on 24 May, will likely show the normal seasonal loss, but the guided NOK40m transaction gain should boost reported EBIT. Lowering our forecasts has led us to cut our target price to NOK20 (30). Given the low P/E, we reiterate our BUY, but highlight that NRC is a high-risk investment, with the major catalyst likely to be an EBIT-margin recovery.NRC Group collects, processes and sells map data. Co. provides services to the Norwegian market, but focuses mainly on projects abroad. Co.'s geo server, BlomURBEX®, enables online distribution of Co.'s products and databases to its customers. The content of BlomURBEX® consists of Co.'s oblique aerial images, TerraItaly® database and 3D city models. Co.'s operations are divided into two main business areas: Blom Geo Engineering Services, which collects and produces geographic information; and Blom Information Services, which provides geographic information as standardized services or through applications adapted to various uses and platforms.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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