Accesso Technology Group PLC

Accesso Technology making "decent progress" despite headwinds; Canaccord sees “significant potential upside”


Canaccord Genuity upgraded its rating for accesso to ‘buy’ from hold’ following the e-ticketing and guest experience firm’s recent full-year 2018 results

Theme Park

Quick facts: Accesso Technology Group PLC

Price: £9.15

Market: LSE
Market Cap: £252.52 m
  • Provides ticketing e-commerce, virtual queuing and guest experience solutions

  • Operates in leisure, entertainment and cultural markets in several countries

  • Five acquisitions since 2012 adding diverse revenue models and market dynamics

  • Despite headwinds, accesso posted 2018 organic revenue growth of 7.8%


What accesso Technology does:

Accesso Technology Group PLC (LON:ACSO) is an AIM-listed firm providing ticketing e-commerce, virtual queuing and guest experience solutions.

The company has active subsidiary companies in several countries, including the USA and Canada, and operates in the leisure, entertainment and cultural markets for customers as varied as Wet ‘n’ Wild Las Vegas and the Calgary Philharmonic Orchestra.

On its website, accesso says: “Our patented and award-winning technology solutions drive increased revenue for attraction operators whilst improving the guest experience.”

Blue Sky:

Canaccord Genuity UK upgraded its rating for accesso to ‘buy’ from hold’ following the e-ticketing and guest experience firm’s recent full-year results, as it sees “significant potential upside” for the stock.

In a note to clients, the Canadian broker’s analysts said that, notwithstanding a tumultuous second half, the AIM-listed firm’s 2018 results reflected “decent progress despite various headwinds”.

They pointed out that, in their view, the headwinds have been amply reflected in the over 70% share price decline by accesso from a September 2018 peak.

The analysts noted that: “In-year weather challenges (this remains a very US summer-centric business), a growing preference for season pass protocols which are changing park attendance behaviour (bad for LoQueue), alongside other one-off impacts all put pressure on growth budgets.”

They pointed out that those headwinds were well captured by acesso’s 2018 organic revenue growth of 7.8%, which comprised an 18.3% increase in Ticketing & Distribution offset somewhat by an 11% decline from Guest Experience.

Deeper granularity welcomed

The analysts noted that accesso’s five acquisitions since 2012 have added diverse revenue models and market dynamics making enhanced disclosure “appropriate”.

They added: “Deeper granularity alongside more vision with regard to organic versus inorganic performance drivers should be broadly welcomed.”

The Canaccord analysts also noted that: “Not before time Accesso is now seeking to extract more revenue and cost synergies through improved integration of its six solution assets. To date less than 5% of customers take more than one product.”

They pointed out: “This requires ‘a more unified, efficient and flexible’ software architecture which will be both more scaleable and faster to implement.

“While we do not pretend to know the coding challenge (or ultimate cost), the strategic ambition to deliver a more open platform makes definitive sense in our view.”

The analysts said the factors above demand sizeable downgrades, with around 10% taken off the top line but about 50% chopped from the net income level.

Target price down to 1,400p

As a result of the downgrades, the Canaccord analysts cut their target price for accesso shares back to 1,400p from 3,000p, with the stock currently trading at 840p, up 3.7% on Wednesday’s close, having dropped in the previous session.

They pointed out that at their new target price, accesso’s shares would trade on 3.1 times full-year 2020 EV/Sales and 13.3 times EV/EBITDA, while their US SaaS (software-as-a-service) cohort trades on a median EV/Sales of around 7.4 times.

The analysts said, in their view, this “wide delta may attract a predator.”

They concluded: “High repeatable revenues (c75% of Group), high gross margins (c72%) and market-leading application footprint might all appeal to a PE (private equity) buyer for example.”

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