Focusrite

LN: TUNE

£324.8m market cap

559p last close

Focusrite is a global music and audio products group supplying hardware and software used by professional and amateur musicians, which enables the high-quality production of music.

Investment summary

Despite macroeconomic headwinds, in its closing update Focusrite has confirmed consensus beating FY19 revenue (c £84m vs our forecast £79.8m) and EBITDA, reflecting the success of its global growth strategy and strength of the brands. The launch of the third-generation Scarlett product ranges in July has been well received, with further significant releases anticipated in H1 FY20. After including the recent £16.2m acquisition of ADAM Audio, net cash stood at £14.9m (FY18: £22.8m). We raise our FY19 and FY20 PBT forecasts by 4% and 3% respectively.

Y/E Aug
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 66.1 13.1 9.5 14.8 37.8 N/A
2018A 75.1 15.5 11.3 17.5 31.9 N/A
2019E 83.8 16.8 13.0 19.8 28.2 N/A
2020E 94.4 18.1 13.7 20.4 27.4 N/A
Last updated on 18/09/2019
Industry outlook

Focusrite’s products connect with a home-based leisure movement that is outpacing overall consumer expenditure. The global music instrument and pro audio wholesale market was £2.7bn in 2013 (source MTM) but is highly fragmented. Management estimates its addressable market at US$575–850m. Currently, it estimates a 55% share of the mass interface market, 12–14% of the semi-professional Thunderbolt market and 2% of the commercial market, with Novation, maker of the Launchpad, also ranking highly in its markets.

Last updated on 18/09/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 14.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 26.3 4.1 24.9
Relative* 22.1 3.8 25.2
52-week high/low 560.0p/364.0p
*% relative to local index
Key management
Phil Dudderidge Chairman
Tim Carroll CEO
Jeremy Wilson CFO

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