Eneraqua’s share price has rebased after the forecast downgrades at the May FY23 results. FY24 will be a reset year, with earnings reducing. However, many of the Group’s structural growth drivers are still intact and the growth story is expected to resume in FY25 (we forecast EPS growth of 28%). Our new forecasts are supported by the order book, with 90%/47% visibility over our FY24/FY25 revenue forecasts. There is a project pipeline of £425m beyond this. Post the results, the shares now trade on a Jan. ’24 EV/EBITDA rating of 4.8x, falling to 3.6x or a P/E rating of 9.2x, falling to 7.2x. Whilst confidence needs to rebuild, we believe the shares should attract a higher rating over time, reflecting an attractive margin profile and long term growth outlook. We target an EV/EBITDA rating of 9.2x, which drives a target price of 249p (15.8x implied P/E). This supports our Buy recommendation.
