Sphera Franchise Group raised to BUY, TP RON 17.1 - Navigating high costs and price-conscious consumers
We upgrade Sphera Franchise Group from HOLD to BUY even if we revise downwards our DCF-derived 12-month cum-dividend TP to RON 17.1 per share (vs. the previous 12-month cum-dividend TP of RON 18.6).In the light of strong Q3 results and our confidence in the Spheras pricing power, we revise upwards our short/medium-term revenues projections (by 8-9% vs our previous model). At the same time, we estimate lower new net openings and a lower adj EBITDA margin as we expect a more challenging macroeconomic environment, which should further reduce the purchasing power of the consumers and discourage them from discretionary spending.
Other changes that we penciled in the model, due to the hotter-than-expected inflation readings, are: (i) a higher WACC and (ii) an increase of 25 bps for the terminal growth rate.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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