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magazineAuction Technology loses its shine as a rapid growth story
Down more than 50% since the start of 2022, Auction Technology (ATG) has been hit by various factors which have led to multiple downgrades to earnings forecasts in recent months.
The company provides online auction marketplaces to help auctioneers reach a bigger audience than the traditional in-person channel.
Approximately 80% of sales come from the US where it faces foreign exchange headwinds. Earnings estimates have also been hit by a decline in asset prices and volumes, and higher investment in the business. Sales growth is forecast to slow considerably in the current financial year.
The stock is still relatively expensive despite the share price decline. According to data from Stockopedia, Auction Technology trades on 20 times EV to EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation) and 22 times forward earnings.
Berenberg says there are reasons to be optimistic, including more revenue coming from value-added services and the potential to drive more bidders on its platform via investments in search engine optimisation, text messages and other new marketing features.
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