With more and more of us buying stuff online, is it any wonder that we are increasingly reaching out to fellow consumers for their seal of approval (or gripes) about products and services, and that’s great news for reviews business Trustpilot (TRST).
The platform now hosts more than 300 million consumer reviews of products and services across hundreds of thousands of websites, according to half year results. Thousands of businesses now turn to Trustpilot for customer transparency and the underlying consumer data analytics it provides to clients, and its value to them is being proved by client retention rates of 101%.
WHAT HAS HAPPENED SINCE WE SAID TO BUY?
Plenty of growth, and happily, that’s being reflected in the share price, which continues to rally. The latest sharp jump followed management’s upping of guidance (11 September).
‘Management now expects adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) to be at the top end of market expectations ($18 million to $22 million)’, noted Berenberg in a note to clients. ‘Current full year 2024 (to Dec) adjusted EBITDA consensus is at $20 million, so we would expect a circa 6% to 10% upgrade.’
That revenue, bookings and ARR (annual recurring revenue) increased 18%, 16% and 16% respectively is great news for investors, as are plans for a £20 million share buyback, around 3% of the shares in the market.
WHAT SHOULD INVESTORS DO NOW?
Up nearly 40%, we must recognise the temptation to lock in gains, especially now that the 12-month rolling PE (price to earnings) multiple has shot beyond 80, according to Stockopedia data. If that suits your investment remit, you might consider selling a partial stake – a two-thirds sale should cover your outlay and leave you with a free ride on any further upside.
The consensus price target ahead of today’s results was 230p, according to Stockopedia data. Berenberg was already ahead of that at 260p, and has now lifted its projection to 270p, implying another 20%-odd upside from current levels.
We still like the long-term Trustpilot growth story, and if you agree, it’s probably best to let the investment run. But for our purposes here, taking a profit looks like a reasonable risk-adjusted decision.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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