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Shares in Bigblu Broadband up 9% since our article last month
Bigblu Broadband (BBB:AIM) 116p
Gain to date: 9.4%
Original entry point: Buy at 106p, 21 February 2019
Full year results from the super-fast broadband provider were well received by the market. Total revenue increased by 26.1% to £55.4m and total customers grew by 13% to approximately 113,000 in the 12 months to 30 November 2018.
Current trading is good with Bigblu adding more than 3,000 net new customers in the three months to the end of February, exceeding total organic growth in its 2018 financial year. It hopes to grow its customer base to 150,000 by 2020.
The company buys satellite broadband and airtime from a selection of major partners, such as Eutelsat, SES and Viasat, and plugs homes, businesses and broadcasters into its network.
Broker Numis has amended its earnings forecasts to take into account Bigblu owning the customer equipment for its relationship with Eutelsat, with the result that it must repay the partner for financing this equipment over a four year period. This alters Numis’ estimates for capital expenditure, depreciation and changes in working capital.
The new forecasts now suggest Bigblu will narrow pre-tax losses from £9.5m in 2018 to £1.3m in 2019, before moving into the black with a £2.5m pre-tax profit in 2020, rising to £5m the year after.
Numis believes the share price could hit 230p over the next 12 months based on a discounted cash flow model, implying you could double your money.
SHARES SAYS: A solid set of results. Keep buying.