Auction Technology Group PLC (LSE:ATG) proposed acquisition of Chairish, a digital seller of vintage furniture, has “strategic merit”, that’s according to JP Morgan.
Analysts at the American bank, in a note, described the deal as suffering “mistimed execution”, i.e. it was announced amidst business challenges.
ATG shares were down some 22% on Monday as it was announced.
JPM analysts, meanwhile, noted progress in key earnings drivers - including conversion rates and double-digit growth in value-added services.
Nevertheless, ATG’s forecast earnings for FY25–27 have been cut by about 3%.
According to JPM analysts, the company’s valuation already prices in a material downside scenario.
JPM repeated an ‘Overweight’ rating, but cut its price target to 710p from 725p.
On Monday, ATG announced the Chairish deal, which sees the London-listed firm acquire the US-based online marketplace for vintage furniture and art for $85 million.
The company expects to see about $8 million of operational synergies to be realised by FY27. Management expects the acquisition to be earnings (adjusted EBITDA) positive in FY26 and accretive to earnings per share in FY27.