Midwich (MIDW LN, BUY, T/P 535p) - Price target increased to 535p
Based upon current operations, we expect gross margins to continue to expand, underpinning a 3yr CAGR for adjusted PBT of 13%. With sustained organic growth, the potential for further M&A activity to support upgrades (in 2017, Midwich has made acquisitions in Spain and Benelux), an ROCE of c30% and a progressive dividend policy implying yields of 3%, we have upgraded our price target from 450p to 535p. We reiterate our BUY recommendation and expect the ten-year run of revenue growth and margin expansion to be upheld as new products are introduced and the geographic footprint expanded.Midwich Group and its subsidiaries are engaged in the distribution of audio visual and document solutions to trade customers including audio visual integrators and IT resellers serving sectors such as corporate, education, retail, residential and hospitality. Co. operates in U.K., Ireland, France, Germany, Australia and New Zealand.
Whitman Howard is an independent institutional stockbroking and investment banking business focused on servicing the needs of our corporate clients and institutional investor base.
The company began trading in 2011 with a team of highly experienced market professionals and the goal of building a leading capital markets business in an entrepreneurial environment.
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