Focusrite

LN: TUNE

£327.8m market cap

564p 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 its closing update Focusrite has confirmed consensus beating FY19 revenue (c £84m) 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 H120. After including the recent £16.2m acquisition of ADAM Audio, net cash stood at £14.9m (FY18: £22.8m). We have raised FY19e and FY20e PBT 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 38.1 N/A
2018A 75.1 15.5 11.3 17.5 32.2 N/A
2019E 83.8 16.8 13.0 19.8 28.5 N/A
2020E 94.4 18.1 13.7 20.4 27.6 N/A
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 08/11/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 14.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 2.0 15.1 34.3
Relative* (1.5) 13.0 29.9
52-week high/low 575.0p/420.0p
*% relative to local index
Key management
Phil Dudderidge Chairman
Tim Carroll CEO
Jeremy Wilson CFO

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