The UK-based ad company S4 Capital PLC (GB:SFOR) highlighted reduced client spending in 2023, hit by “volatile macro conditions.” In its trading update, the company stated that Q4 2023 performance was in line with the previously lowered expectations announced in November. S4 Capital also indicated that it anticipates no improvement in the current market conditions throughout 2024. Further, it expects cautious marketing spending from its clients to continue this year.
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Despite these factors, the S4 Capital share price recorded a gain of around 4% at the time of writing today, as investor expectations aligned with these anticipated numbers.
S4 Capital is a media company specializing in digital advertising and marketing, founded by industry veteran Sir Martin Sorrell.
Trading Update
For the full year 2023, S4 Capital expects a decline of 4% in like-for-like revenue compared to the preceding year. The company continues to anticipate full-year operational EBITDA margin between 10% and 11% after previously revising it down from the 12% to 13.5% range in November. The performance during the year was hit by reduced spending, mainly from the company’s technology clients.
In the second half of 2023, the company managed its costs effectively, leading to improved EBITDA margin performance. Additionally, the company has delayed its merger payments of £10 million to 2024. It expects net debt to be at the lower end of the guided range of £180-220 million.
The company will publish its annual results for 2023 on March 27, 2024.
What is the Target Price for S4 Capital?
In the last 12 months, the stock lost around 80% of its value, reflecting modest sales figures and reduced profit forecasts. Moving forward, analysts remain moderately bullish on the stock, considering the company’s cautious approach to business in 2024.
According to TipRanks, SFOR stock has been assigned a Moderate Buy consensus rating based on one Buy and two Hold recommendations. The S4 Capital share price target is 69p, which represents a change of 68% from the current trading level.
