Focusrite

LN: TUNE

£304.5m market cap

524p 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

Focusrite has reported solid H119 revenue growth, reflecting particularly strong performance in Europe and for its Focusrite ranges globally. We leave forecasts unchanged, recognising the macroeconomic challenges in H2 arising from US tariffs and Brexit. The company is actively seeking opportunities to use its substantial net cash balance (H119: £26.2m), as reflected in the current valuation.

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 35.4 N/A
2018A 75.1 15.5 11.3 17.5 29.9 N/A
2019E 78.0 15.9 11.8 17.9 29.3 N/A
2020E 81.7 16.5 12.0 18.0 29.1 N/A
Last updated on 19/03/2019
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 19/03/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 27.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 2.3 9.2 29.4
Relative* 0.3 0.5 25.7
52-week high/low 524.0p/364.0p
*% relative to local index
Key management
Phil Dudderidge Chairman
Tim Carroll CEO
Jeremy Wilson CFO

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