Aquis Exchange PLC (AIM:AQX) shares look "materially undervalued" at current levels said Panmure Gordon after reading this morning's final results for 2023.
The broker reiterated a 'buy' rating on the financial markets and technology group and a price target of 840p that is more than double the last close price of 360p, saying the rating and target reflect "so much potential unrealised in estimates or the rating".
2024 is expected to be “another year of strong growth", said analyst Rae Maile, given the increasing market share of trading, further recent client wins for the Aquis Technology arm and the benefit of last year’s 16 IPOs feeding into current year revenues.
On valuation, he said: “With the share price having suffered alongside the market more generally but with the business which has continued to develop and grow, the rating has fallen sharply.
“A perspective PER for the current year of 15x very quickly falls to under 14x and then to 12x for 2026E on estimates which could prove to be very materially higher on the introduction of a consolidated tape."
The business performed well in 2023 despite the "clearly hostile environment" and has started the current year with strong momentum in important parts of its business.
Maile said: "With market share higher month-on-month in pan-European trading, new trading options have been introduced, the scope for further technology progress has been highlighted by confirmation of the central bank, which offers "a very visible vindication of its capabilities".
The analyst said there is much to commend the business even before considering the possibilities of consolidated tapes in the UK and Europe, "from which Aquis can be expected to be a major beneficiary".
A consolidated tape refers to a system that aggregates and reports real-time trade data like prices and volumes from various trading venues across Europe into a single, comprehensive stream.
The aim is to enhance market transparency by providing investors with a unified view of trading activity, making it easier to see the best available prices for securities across different markets.
Results confirmed revenues of £22.6 million and pre-tax profit of £5.2 million, as had been indicated in the company's trading update in January, with management stating that the outlook is “currently in line with board expectations”.
Panmure is a market maker to Aquis Exchange.