Focusrite

LN: TUNE

£281m market cap

483.5p 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

November trading was strong, putting year-to-date revenue ahead of the same stage last year. In FY18, PBT grew 19.2% and EPS 18%. Results may be sensitive to the disposition of US tariffs on Chinese-sourced goods. Despite signs of the dispute moving towards a negotiation phase, uncertainty remains and currently the US still plans to raise tariffs from 10% to 25%. A no-deal Brexit could have a limited impact. Net cash of £22.8m at August 2018 makes up over half the balance sheet.

Y/E Aug
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 66.1 13.1 9.5 14.8 32.7 N/A
2018A 75.1 15.5 11.3 17.5 27.6 N/A
2019E 78.0 15.9 11.8 17.9 27.0 N/A
2020E 81.7 16.5 12.0 18.0 26.9 N/A
Last updated on 21/02/2019
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 21/02/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 27.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (3.1) 11.2 39.5
Relative* (5.7) 9.1 42.2
52-week high/low 518.0p/346.5p
*% relative to local index
Key management
Phil Dudderidge Chairman
Tim Carroll CEO
Jeremy Wilson CFO