Focusrite

LN: TUNE

£372.5m market cap

641p 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

In November, Focusrite delivered strong FY19 results, highlighting improved revenue momentum, better-than-expected margin delivery and encouraging trading on its first major acquisition since IPO, ADAM Audio. We increased our underlying assumptions for FY20. In December, the AGM statement indicated that Q120 trading is in line with expectations and Focusrite announced its second, and largest, acquisition since IPO, Martin Audio, which diversifies it into a complementary market that is growing and profitable. Our DCF-based valuation is 618p.

Y/E Aug
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 75.1 15.5 11.3 17.6 37.5 25.4
2019A 84.7 17.2 13.8 21.4 30.8 27.9
2020E 95.6 18.5 14.2 21.7 30.4 25.4
2021E 99.0 19.3 14.4 21.9 30.1 24.5
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.

Last updated on 12/02/2020
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 23
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (2.2) 14.0 28.9
Relative* (0.4) 11.2 22.2
52-week high/low 740.0p/425.0p
*% relative to local index
Key management
Phil Dudderidge Chairman
Tim Carroll CEO
Jeremy Wilson CFO

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