RHP RHIPE LIMITEDCloud services – Overnight Price: $1.83 Bell...

RHP RHIPE LIMITED

Cloud services – Overnight Price: $1.83

Bell Potter rates ((RHP)) as Buy (1) –

Rhipe announced the acquisition of emt Distribution for upfront consideration of -$11.0m. Bell Potter estimates the purchase is at an attractive multiple. Emt is a cyber security distribution specialist with operations across Australia, the Middle East and Asia.

The broker sees it as a compelling transaction due to the diversification of existing business away from Microsoft, leverage to the growing cyber security market and the expansion opportunity into the enterprise client segment.

In addition, the broker sees a margin expansion opportunity and a positive impact on EPS (up to 15% accretive). The Buy rating is maintained and the target price is unchanged at $2.50.

This report was published on April 8, 2021.

Target price is $2.50 Current Price is $1.83 Difference: $0.67
If RHP meets the Bell Potter target it will return approximately 37% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

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Shaw and Partners rates ((RHP)) as Buy (1) –

Rhipe has announced the accretive acquisition of emt Distribution, a cybersecurity channel and services business that is established, growing and profitable, according to Shaw and Partners. It's considered the cyber security market is likely to deliver extreme growth in coming years.

Consideration is for -$11m upfront with a further -$2m in available earn-out over the next 24 months. The broker believes the company has now commenced EPS accretion outside of organic growth and the group has the balance sheet and appetite to accelerate this.

The analyst upgrades EPS forecasts by 8% in FY22, and 7% in FY23 onwards. The Buy rating is unchanged and the target rises to $3.04 from $3.02.

This report was published on April 7, 2021.

Target price is $3.04 Current Price is $1.83 Difference: $1.21
If RHP meets the Shaw and Partners target it will return approximately 66% (excluding dividends, fees and charges).