IOMINVESTCOM
08 May 2018
4 shares the pros are buying Focusrite (TUNE)Who’s trading? Citywire AAA-rated Julian Fosh and Anthony CrossThe trade: Liontrust’s Fosh and Cross have upped their holding in audio equipment manufacturer Focusrite from a previously undisclosed amount to 5.2% of the shares worth £14.3 million at a share price of 472p.How have the shares performed? Focusrite’s shares almost doubled over one year, seeing a significant uptick in March especially following a strong trading update. At 488p its shares are 113% higher than its 52-week low of 229p.What does the company say? The business’s half-year result showed a 21% rise in revenue to £38.8 million, while pre-tax profit was up by 26.8% to £5.8 million. It had a particularly strong sales period over the Christmas period and grew sales in the US, UK and Europe.What’s the outlook? Analysts at Edison Investment Research upgraded their profit forecast for 2019 by 3.5%. ‘The missing element is excess cash, where the market appears to be discounting investment of the net cash balance at a c.15% return,’ they said.[link]
IOMINVESTCOM
25 Apr 2018
Focusrite is in tune, says AJ Bell Focusrite is in tune, says AJ BellInvestors should not overlook audio equipment supplier Focusrite (TUNE), which AJ Bell said was a ‘bright spot’ in the UK market.Analyst Russ Mould noted half-year results showing a 26.8% rise in pre-tax profit, a 33% increase in the dividend and a more-than-doubling of net cash at the business, founded by former Led Zeppelin sound engineer Phil Dudderidge.‘These levels of growth would make your typical large-cap boss green with envy,’ he said. ‘Its performance isn’t a one-off as Focusrite has delivered growth in all key metrics ever since it joined the stock market in 2014.‘For all the doom and gloom surrounding global stock markets this year, it is worth remembering that there will always be some bright spots.’Mould added that investors should not overlook small-cap stocks as the ‘smaller companies universe is often home to some very impressive businesses’.The shares jumped 6.3% to 436p yesterday.[link]
IOMINVESTCOM
24 Apr 2018
Paul Scott's view Focusrite (LON:TUNE)Share price: 442p (up 7.8% today at 12:45)No. shares: 58.1mMarket cap: £256.8mHalf year resultsFocusrite Plc, the global music and audio products company supplying hardware and software products used by professional and amateur musicians, today announces its Half Year Results for the six months ended 28 February 2018.This is a smashing set of figures. See the highlights below, with very good growth, which is all organic I think. Note also the lovely cash pile on the very strong balance sheet;5adf1b7777763TUNE_highlights.PNGI've reviewed the P&L, balance sheet, and cashflow statement, and everything looks smashing - no issues at all.Outlook - a word of caution here that the very strong growth in H1 is likely to slow in H2;The first half benefited from an especially strong Christmas holiday season. Since the half year end, revenue and cash have continued to grow although, as expected, at a slower rate than in the first half. We remain confident about the outlook for the rest of the year and beyond: future product plans are taking shape, the geographic expansion continues and the strategy developments are bearing fruit. Valuation - it looks expensive, but the PER could be justifiably adjusted down by about 10%, to reflect the outstanding balance sheet strength.Also bear in mind that the company has established a trend of beating forecasts, so the shares may not be as expensive as they look on current forecasts.5adf1ce7d1035TUNE_growth_&_value.PNGMy opinion - this looks a really excellent company.My only slight reservation is that the products have a limited lifespan. So the company has to keep investing in R&D, and producing attractive new products. So far so good though, it seems to be performing very well, and the Directors sound confident about the future.A big thumbs up from me about the company. Although I think the price looks up with events.[link]
IOMINVESTCOM
24 Apr 2018
Re: Paul Scott's view Outlook and current tradingThe first half benefited from an especially strong Christmas holiday season. Since the half year end, revenue and cash have continued to grow although, as expected, at a slower rate than in the first half. We remain confident about the outlook for the rest of the year and beyond: future product plans are taking shape, the geographic expansion continues and the strategy developments are bearing fruit.
frusset
06 Apr 2018
Re: Paul Scott's view I sold most of my TUNE today, because of the trade dispute between the US and China. From the most recent annual report, "USA (42% of Group revenue)", and "Our manufacturingpartners are located in South China and we use third-party logistics support.". I could be wrong. Maybe Focusrite could easily have its gear manufactured outside of China. Maybe the trade tiff will fizzle out instead of escalating. I don't like selling stock in an excellent business, but it seemed like the prudent thing to do, as I can't rule out the risk, and the stock could be affected quite strongly because it's on a high valuation, not far off its high.
IOMINVESTCOM
09 Mar 2018
Re: Paul Scott's view This company makes hardware and software products for the music industry, under its own brands. Headquartered in the UK, it distributes its products worldwide.Rather than making or distributing musical instruments, the company makes the tools used by producers - microphone preamplifiers, audio interfaces, synthesisers and apps.This is a nice update, which has been warmly received. First-half revenue, profits and cash are up year-on-year.As a result, revenue for the half year ending 28 February 2018, is expected to be over £38 million, up from £32.0 million in the same period last year. This represents an increase of over 25% on a constant currency basis. Conversion to cash has also remained positive and, as at 28 February 2018, net cash was £19.7 million, up from £14.2 million on 31 August 2017 and £9.4 million on 28 February 2017.For a company which sells internationally, such as this one, constant-currency measures are what I focus on. Needless to say, 25% is a fantastic gain.The CEO comments that the recent Christmas holiday period gave the company a big boost, stating that the outlook remains "confident" for the future:We keep a close and cautious eye on some of the headwinds being experienced by the music retail industry, particularly in the US, but overall believe we remain well positioned to continue to grow as our strategy of "making music easier to make" resonates with consumers throughout the world.Some have expressed dissatisfaction that there is no reference to market expectations in the statement.For what it's worth, I can see revenue forecasts for the current year of £72.6 million, up 10%, i.e. much lower than the growth actually reported for H1. If you include the negative currency effect (beyond Focusrite's control), the revenue growth reported is 19%.Full-year revenue growth may be difficult to sustain at 19%, as the CEO's comments regarding Christmas suggest that buying might be more weighted to Christmas than it was before. In doing so, he has help to manage expectations at a lower level.Because of this cautious approach, commissioned researchers (linked to in the comments below) have increased their EBITDA/PBT expectations for this year and next by only around 4-5%.As Paul has noted before, Focusrite has a track record of beating expectations. Today's statement and the response by analysts give the company plenty of room to beat expectations again in the rest of FY 2018 and in FY 2019, I think:5aa274c311f3bTUNE_20180309.PNGMy opinion: so far, I like what I see. The company's products are high-tech and potentially best-in-class, although I would need to perform more research to confirm this. Even though it's in roughly the same industry as Gear4Music (G4M), it's a completely different animal. And while Gear4Music is a good company in it's own right, I would personally attach a much higher multiple to Focusrite.So I agree with Focusrite's StockRank - it looks attractive, even if it is more expensive than average.[link]
IOMINVESTCOM
11 Jan 2018
Re: Paul Scott's view Share price: 347p (up 3.6% today, at market close)No. shares: 58.1mMarket cap: £201.6mAGM trading update - the company has a 31 Aug 2018 year end, so it's just over a third of the way through the current financial year. Description;Focusrite Plc (AIM: TUNE), the global music and audio products company that trades under the Focusrite and Novation brands around the worldToday's update just gives a general impression, rather than any specifics;"In November 2017, at the time of our final results announcement, we updated the market that our revenue and cash had both grown further since the year end. I am pleased to confirm that this strong growth has continued in November and December."I think this is too brief. The company should have given an indication of where its performance is versus full year market expectations. Whilst that is tricky to do early on in the financial year, they could have said whether performance is consistent with full year expectations or not. I think the company and its advisers should consider being a bit more open with investors.My opinion - I've written positively about this company in the past. It seems a high quality company, with an excellent track record, as you can see from the Stockopedia graphs here;5a5707c2754ccTUNE_graphs.PNGAlthough the valuation is high (forward PER of 22.2), this seems justified, given its excellent track record. Although that's no guarantee of future performance, of course.Brokers are routinely pushing up earnings forecasts, which suggests that the company might surprise on the upside in future;5a570837f2a6eTUNE_brokers.PNGOverall, if your own research suggests to you that profits are likely to continue rising in future, then this share could be worth considering. I'd want to understand its market, and competitors more before considering a purchase myself.5a5708bfa14c2TUNE_chart.PNG[link]
IOMINVESTCOM
21 Nov 2017
Paul Scott's view Share price: 319p (up 5.5% today)No. shares: 58.1mMarket cap: £185.3mFinal results - for the year ended 31 Aug 2017.These numbers look very good. I won't go into all the detail, as you can read the RNS yourself, if interested.A few key points;Adjusted, diluted EPS up 29.8% to 14.8p. This seems to be a modest beat of consensus EPS shown on Stockopedia of 14.6p. Although you can never quite be sure that consensus is based on the same criteria as the reported numbers.Forex movements have been favourable to revenue growth (and hence profitability) somewhat, so we mustn't expect such a high growth rate to necessarily repeat in future, e.g. note the comparisons of constant currency, versus reported currency below;All regions grew. Regionally, the USA is the largest market in the music industry and the largest market for the Group's products. Revenue in the USA grew 30.9% (constant currency: 18%) to £28.0 million, Europe grew 11.4% (constant currency: 7%) to £25.2 million and the Rest of the World grew by 24.9% (constant currency: 13%) to £12.9 million. The company is very open about this;I am very pleased to report that FY17 has proved to be another successful year, exceeding our expectations for revenue, at £66.1million (+21.6%), profit and cash flow. The Company's products have continued to grow market share in our established and growth markets.Revenue and profits have been boosted by the strengthening of the Euro and US Dollar but, even on a constant currency basis, the Company has enjoyed excellent growth.Balance sheet - this is a very conservatively financed company, and its balance sheet is wonderful! Here are the usual stats that I focus on;NAV: £32.9mNTAV: £27.9mCurrent ratio: 4.09 - very, very strong.Net cash: £14.2m cash, no interest bearing debt.There doesn't appear to be any pension fund.The upshot of this, is that it provides safety for shareholders. If trading were to deteriorate, then obviously the share price would fall. However, shareholders don't have to worry about a situation like Accrol got itself into - I can't see that there would ever be a need for a discounted fundraising at Focusrite. So shareholders don't need to fear any solvency issues, nor worry about dilution. Plus the company has firepower to do acquisitions using its cash, which would increase earnings potentially. You often find such a conservative approach at companies which are still run by the original entrepreneur or family that set up the business, and it's a very positive thing in my view.Dividends - very small, at only 2.7p for the year - although this is up 38% on last year. Maybe the company is hoarding cash for acquisition(s)? If not, then they really should pay out the surplus cash in a special divi.Stockopedia says - predictably high StockRank of 81, and categorised as a "High flyer".Outlook - Although competitive pressures remain strong, changes in technology and new customer requirements can emerge quickly, and macroeconomic and political factors affect our end customers and distributors alike, we remain committed to keeping abreast of these risks in order to continue to deliver strong growth.Since the year end, revenue and cash have both grown further. We continue to see strong market acceptance across our expanding portfolio and our new product pipeline continues to grow. Our solid momentum has continued into the current year and we continue to look forward with confidence.That sounds confident. However, I think it's worth noting that this company has to run to stand still - i.e. it has to continuously innovate, and launch new products, as old ones are copied by competitors & prices reduce.Cashflow statement - very interesting. This confirms what a lovely business this is. A couple of comments;Intangible amortisation of £2.95m is now very close to capitalised development spend of £3.1m. So previous concerns that some investors
II Editor
25 Aug 2017
NEW ARTICLE: Why AIM could miss out on the next ASOS "There is a danger that the London Stock Exchange is losing sight of what AIM is for. An example of this is the suggestion that there should be minimum fundraising levels for companies that join the junior market.Bringing in minimum fundraisings ..."[link]
pharmaspecialist
20 Jul 2017
Corporate activity? I have always thought this is a high quality company and I have been following it closely as a shareholder. My guess is that there may be corporate activity in the offing and this is being shown by the share price increases on no news.
city watcher
17 Apr 2017
Re: Anybody interested? Anyone interested in getting away from it all.[link]
IOMINVESTCOM
20 Mar 2017
Re: Paul Scott's view Broker updates - we were discussing last week where I get broker reports from. My broker emails me stuff, as I'm classified as a professional investor. Also, PR companies send me them, to help with writing these reports. Plus, for speed, I also subscribe to Research Tree, which is a quick & easy way to look up which of the reporting brokers which make their reports available through the platform have published updates.Edison (free to access through their own website) has put out a note today, saying that it's leaving forecasts unchanged at the moment, but that "risk to market forecasts is now to the upside" - which has always struck me as a peculiar phrase! When you see that phrase, it's often a really good time to buy a share, as it means that the company's almost certainly out-performing.Panmure has also left its forecasts unchanged, by suggests there is "excellent scope" for the forecasts to be raised in early May, when interims are announced. It's interesting to note that their forecasts assume 15% top line growth. So the 23.6% revenue growth announced today is usefully ahead, and providing margins are strong, that should provide an operationally geared boost to profits. There is clearly a big forex boost too, as the 23.6% reported top line growth is a lot higher than the 12% constant currency figure reported.As you can see from the Stockopedia graphic below (which is incredibly useful, and I think is worth the subscription fee alone), broker expectations have already risen a fair bit over the last 12 months, and look set to go higher again. I'm paying much more attention to broker forecast upgrades now, as it's proving a very good hunting ground for overlooked growth companies, in this bull market.My opinion - as you've probably gathered, I really like this company, and have written about it here before in a positive vein. My only worry is whether profits & growth are sustainable? The danger is that the company may not be able to keep innovating, with new products, enough to keep the competition at bay. I need to do some research on that, before buying in any size.Although based on what I've read today, and my previous research on the numbers, I've decided to make a small initial purchase, then do some more work on it when time permits. Generally I like to scale into positions, over time, as my understanding of the company improves.I'm keen to hear reader views on this, especially from anyone who is bearish. Considering the bear case is probably more important than hearing views that just reinforce my thinking.[link]
IOMINVESTCOM
02 Dec 2016
Paul Scott's view [link] opinion - this looks a smashing, high quality business. I would need to do a lot more research on the company before being prepared to pay a fairly hefty multiple for it though, after the recent jump in share price.There again,the market is paying up for high quality growth companies right now.Note that the outgoing CEO sold his c.1m shares recently, and then exercised options over a fresh batch of 619k almost free shares, which he currently holds. The key player is the major shareholder/founder.
IOMINVESTCOM
22 Nov 2016
Good day put in today Based on decent results released earlier. 10% share price gain.
Simbr
16 Jun 2016
IOS V2.0 "iOS music making gets serious as Focusrite releases Launchpad for iOS V2.0. For reference ‘Launchpad for iOS’ has become one of the most important music making and remixing apps on the Apple app store. With the biggest update since its debut, V2 takes iOS music creation from the studio to the dance floor and with it a higher degree of professionalism. We like this further evidence that Focusrite continues to debut products at an impressive technology insertion rate – remember forecasts are predicated on new product debut and sale. From a valuation perspective we like the EV/Sales (1.6x), EV/EBITDA (9.1x) and PE (16.7x) – which are all illustrative of an attractive valuation (a 25% discount to the wider Consumer tech segment) as the shares have been hit on Brexit uncertainty."Panmure note out this morning on research tree
