Market's view on Pennant International
Published on April 2024
- Concerns are raised about the delayed timing of the company’s accounts compared to previous years.
- WHI has reiterated a 65p price target for the company’s stock.
- The UK’s decision to increase defence spending to 2.5% of GDP is seen as potentially negative for small cap stocks, with worries about the company needing to secure larger contracts to replace expiring ones like the Apache contract.
- Discussions include the possibility of a capital raise, with speculation about the reasons, such as financing acquisitions or managing cash flow from previous acquisitions.
- There’s speculation about the company’s financial positioning, with some watchers suggesting an improvement and anticipation of benefitting from increased defence spending.
- Expectations are voiced about upcoming contract news potentially driving the stock price upwards.
- Engagement with the CEO reveals bidding on over £30m in the recent months, with a historically high win ratio suggesting potential for significant business gains.
- There are ongoing issues with cash flow, attributed to the nature of large defence contracts and the timing of payments, although increased focus on software and ARR (Annual Recurring Revenue) is expected to improve visibility and financial stability.
- Positive outlooks are tempered by concerns about the company’s actual cash flow and the effectiveness of its investment in software development, with some stock watchers expressing disappointment in the financial management and expecting improvements.