Analysts at Canaccord Genuity have reiterated their buy stance on AIM-listed Wholesalers Kitwave, and increased their price target from 210p to 240p after Kitwave completed the acquisition of MJ Baker Food Service for £24.5m.
MJ Baker offers its customer base over 3,500 products across ambient, chilled and frozen food categories, together with alcohol, confectionery and non-food items.
MJ Baker will bolster Kitwave’s existing wholesaling business which already services 38,000 independent businesses throughout the UK.
“The acquisition of M.J. Baker is an excellent addition to our Foosdservice division and expands the Group’s nationwide reach into the South West. M.J. Baker is renowned for providing a quality delivered solution to its customers, a key part of the Kitwave Group ethos,” said Paul Young, Chief Executive Officer of Kitwave.
Following the integration of MJ Baker, analysts at Canaccord see Kitwave Kitwave representing significant value when compared to their peer group on a price/earnings basis.
“The business is trading at a c.52% discount to our selected peer group average of c.18.7x, which we believe is unjustified given the Group’s superior forecast earnings growth. We reiterate our BUY rating and increase our target price to 240p from 210p reflecting the upgrades,” Canaccord said in a note.
Analysts at Cannacord see the MJ Baker acquisition increasing EBITDA by 9% in 2022 taking into consideration 8 months of ownership during the period.