On Monday, Deutsche Bank (ETR:DBKGn) raised its rating on Cancom SE (COK:GR) stock from Hold to Buy, adjusting the price target upward to EUR 42.00 from the previous EUR 34.00. The upgrade follows Cancom's reported first-quarter revenue for 2024, which saw a 39% year-over-year increase.
EBITDA for the same period rose 26% year-over-year, despite headwinds from higher operating expenses, reduced marketing funding from OEMs, and lower supplier bonuses.
Cancom has provided guidance for the full year 2024, projecting revenue and EBITDA to each grow by 23% year-over-year at the midpoint.
This forecast is supported by the initiation of replacement cycles for hardware, increased requirements for IT infrastructure, and investments driven by AI solutions. These factors are expected to sustain Cancom's growth above the general IT market level.
The company anticipates a rise in demand during the second quarter of 2024 and has cited several factors that may contribute to a successful fiscal year.
Cancom has reported positive operating cash flow for six consecutive quarters and has demonstrated improved management of operating working capital. Additionally, 2024 marks the first full year that Cancom will benefit from the acquisition of KBC.
Furthermore, potential tailwinds could arise from recent EU directives, such as NIS2 and DORA, as well as the upcoming end of Microsoft (NASDAQ:MSFT)'s support for Windows 10. These elements, combined with the company's robust cash generation, paint an optimistic picture for Cancom in the coming year.
In light of these developments, Deutsche Bank has increased its revenue and EBITDA forecasts for Cancom for the fiscal years 2024 to 2026 by less than 5%.
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