LiveChat Software: No more free lunches (downgraded to HOLD)
We have downgraded our rating for LiveChat Software (LVC) to HOLD from Buy and cut our price target (PT) from PLN 72.1/share to PLN 35.2/share, implying 7% upside potential. LVC’s share price has dropped over 40% in the past 12M, which we see as justified due to the dropping net adds and the risks connected with increasing competition in the global live chat market. We believe that the era of costless customer base growth has ended for LiveChat. The company now has to fuel net adds either through its Partner Programme, or via increased marketing expenditure, and both will affect LVC’s profitability. On the other hand, on our revised forecasts (changes due mainly to our lower assumed monthly net adds of 200, vs. 450) for the next three years, LiveChat should still deliver a c.13% EBITDA CAGR and a dividend yield of 7-8%. LiveChat trades at discounts of 80-84% on our 2018-20E EV/EBITDA vs. its peers, which makes it a potentially attractive acquisition target, in our view.Livechat Software SA is a Poland-based company engaged in the software industry. The Company is a producer and global provider of software as a service (SaaS) LiveChat, communication software for business. LiveChat enables fast and intuitive communication between company's employees and customers visiting corporate Website. The application also tracks customers' activity on a Website. The Company produces and distributes software for business-to-consumer (B2C) and business-to-business (B2B) communication. Its product portfolio includes three types of LiveChat plans: Solo, dedicated to single user and offering such features as unlimited chats, ticketing system, enhanced security and basic reporting; Team, for numerous teams that additionally includes chat routing and groups creation; and Enterprise, for companies that, additionally to previous ones, provides advanced reporting, work scheduler and unlimited visits on a Website.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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