For most shareholders I think the bid failure will great news. HSN has guided revenue growth to 500m+ by 2025 and stated they do not consider this a ‘stretch target’. They did not offer EPS guidance but with the revenue guided to grow by >50%, (from the FY21 $325m), it would not be unreasonable to project a similar level of EPS growth…
A back of the envelope projection of the fy21 EPS at similar growth rate and multiplying the result by current PE levels would give a share price estimate for 2025 of $8-9. Adding in dividends, this gives a reasonably likely return well in excess of 15%pa… for medium/longer term buy & hold investors. This is without factoring in that at these growth rates it is likely at some stage HSN’s PE ratio will be re-rated upwards.
So… to each their own, and DYOR,… however I am delighted to see BGH drop the bid… and I will be topping up during market weakness.
As the board has shown they are open to offers.. I wouldn’t be surprised if others run their ruler over HSN in future. if so…hopefully the board will manage any future approaches a lot better …and for the interests of all shareholders.
HSN Price at posting:
$5.55 Sentiment: Hold Disclosure: Held
