Market's view on Redcentric
Published on April 2024
- Redcentric is due for a trading update on 23rd April, with expectations possibly influenced by recent dividend reinvestments that may have affected stock prices.
- The company’s performance in the datacentre sector is strong, with buoyant demand and falling inflation expected to reduce financing costs. An update later in the month will confirm if they are on track with the forecasts.
- Kestrel Partners LLP purchased a significant number of shares, indicating confidence in Redcentric’s future.
- Management has recently purchased shares, signaling potential inside confidence in the company’s valuation and future performance.
- Despite facing headwinds like high power prices due to geopolitical issues, Redcentric managed to make a strategically timed acquisition.
- The company has undergone multiple acquisitions, with concerns that the market does not believe the forecasts provided.
- Redcentric’s strategic plans involve the integration of acquisitions costing £42m, aiming to significantly increase EBITDA by FY25.
- Despite transformations and guidance, the share price remains lower than three years ago, reflecting market skepticism.
- The company faced a downgrade for FY24 and challenges related to higher-than-anticipated electricity procurement costs at a third-party managed facility.
- Rising costs have put pressure on Redcentric, mainly due to wage inflation, electricity costs, and software license costs.