Focusrite (TUNE)

Business description

Focusrite is a global music and audio products group supplying hardware and software products used by professional and amateur musicians, which enable the high-quality production of music.

Y/E Aug Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2015A 48.0 9.3 7.2 11.8 24.2 N/A
2016A 54.3 10.2 7.7 13.0 22.0 N/A
2017E 66.0 12.4 9.2 15.0 19.0 N/A
2018E 71.8 13.2 9.7 15.5 18.4 N/A

Last updated on 14/09/2017

Investment summary

Following a strong H1 driven in part by known product launches, the pre-close indicates an equally strong H2, ahead of expectations, with revenue up c 20%. The fact that both revenue and profit are now guided ahead of the first half raises our FY earnings forecast by 9% after a 5% upgrade at interim. Reasons for the strong H2 include product sales and mix, foreign exchange benefits and active gross margin management. We raised our FY18e EPS by 6% and our valuation from 243p to 344p/share.

Last updated on 03/10/2017

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. At IPO in 2014, management estimated its addressable market at c £450m. Currently, it estimates a 40% share of the mass interface market, 10% of the semi-professional Thunderbolt market and 2% of the commercial market, with Novation also ranking highly in its markets.

Last updated on 03/10/2017

Key management

Phil Dudderidge, Chairman
Tim Carroll, CEO
Jeremy Wilson , CFO

Company address

Windsor House
Turnpike Road
HP12 3FX
United Kingdom
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