The two public sector deals may not materialise now until 2018, while their revenues will likely be lower.
Companies: Cityfibre Infrastructure
Cityfibre's (AIM: CITY) Interims have been announced this morning which outlines an overall positive result for the Group's start to FY17.
EBITDA is up from £0.4m in H1 16 to £1.7m in H1 17 from Revenues of £9m (up 36% from £6.6m in H1 16). The number of connections of the Group's fibre optic service is also up 21% YoY to 4,235 (H1 2016: 3,490).
Despite the acceleration of growth, the RNS statement also noted:
"Two material public sector opportunities have now shifted into 2018 which will cause revenue for this segment to fall marginally below our initial expectations."
The news of the delays sent shares in the Group down 15% to 39p in this morning's trading.
Post period, The Group also acquired Entanet in July in a £29m cash deal. It also completed a placing for £201.8m, with the capital raising issuing c. 367m new shares at 55p per share.
As a result of today's announcement, brokers finnCap and Liberum both released research notes on the Group, outlining their updated forecasts.
finnCap's note downgraded EBITDA, but raised its Revenue forecasts for FY17:
"Refreshed forecasts accommodate the £202m equity placing, the Entanet acquisition, the hiatus in new city wins, and increased opex to drive FTTH planning. EBITDA of £5.1m (formerly £8.3m) is now expected from revenue of £30.5m (formerly £24m)."
Their target price is 90p.
Liberum also downgraded forecasts in their note, saying:
"We have cut our target price from 134p to 80p mainly due to the higher share count following the capital raise."
Their EBITDA forecast for FY17 was downgraded to £4.2m from Revenue of £32.3m. They also reiterated their Buy stance on the stock, noting their view the Group "will eventually be an acquisition target for companies like Zayo Networks and Vodafone, though M&A is unlikely in the near-term."
