Broker view – why shares in FTSE AIM 100 listed Earthport are a ‘hold’

21st March 2016


As FTSE AIM 100 listed group Earthport reports interim results Ian Forrest, investment research analyst at The Share Centre, explains why he is calling the firm’s shares a ‘hold’…

In its unaudited interim results reported this morning, financial services group Earthport said revenues rose 17.6% to £10.6m, even though it was impacted by restructuring initiatives.

In addition, investors should appreciate that its balance sheet remains well funded, despite the potential impact of the Baydonhill incident.

Interested investors will want to note that increases in administrative expenses saw Earthport’s adjusted operating loss increase to £6.68m from £2.25m the year previous, whilst cash on the balance sheet stands at £24.15m.

Most importantly, the company continues to invest in enhancing its board and management team.

It is difficult to value a company with no earnings or dividends, and a potential loss from the Baydonhill incident makes valuation even more difficult.

While Earthport has been growing strongly and may recover from the situation the event has presented, the risk level has clearly become very high.

Therefore, at present we recommend Earthport as a ‘hold’ for those who are willing to accept that and can wait until there is more clarity about the financial impact of what may have been fraudulent activity.

For those interested in the sector, our preferred stock is Paysafe for medium risk investors seeking growth, due to the significant opportunities for the group’s products in the US and around the world.

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