On Friday, Deutsche Bank (ETR:DBKGn) increased the price target on XPS Pensions Group PLC (XPS:LN) shares to £3.30, up from the previous target of £3.10, while maintaining a Buy rating on the stock. This adjustment follows XPS Pensions' announcement of significant growth in its financial metrics.
The company reported a 20% year-over-year increase in underlying Group revenue. Additionally, its adjusted EBITDA climbed by 32% to roughly £54.8 million, surpassing the consensus estimate of £53.6 million by about 2%. This performance indicates an improved margin of approximately 27.9%, which is an increase of around 260 basis points compared to the previous year.
XPS Pensions also experienced a notable 24% rise in adjusted earnings per share (EPS), which reached 15.1p. The firm's strong free cash flow (FCF), coupled with the approximately £35 million proceeds from the sale of its NPT business, contributed to a significant reduction in net debt, which fell to around £14 million from £55 million.
The company's leverage, measured as net debt to EBITDA, now stands at a low 0.3 times. According to the analyst, this low level of debt provides XPS Pensions with substantial financial flexibility, enabling the firm to pursue organic growth opportunities and potential mergers and acquisitions. These strategic moves could allow the company to consolidate its position in the mid-market or to expand into adjacent markets such as the insurance sector.
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