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Tuning up

Update | Consumer Support Services | 13 Sep 2017

Following a strong first half driven in part by known product launches, this equally strong second half appears to show a more fundamental improvement resulting from sustained sales growth and improving mix together with margin and cash management in Focusrite’s international markets. These factors underpin our conviction that the company has sustainable independent strength.


Rising scale

Update | Consumer Support Services | 09 Mar 2018

Focusrite’s trading statement indicates constant currency sales growth of over 25%, even better sales growth than the headline 19%, because of the US dollar’s depreciation. The background is a continuation of widespread demand for the full product range across all the main geographies. Although trading patterns may be shifting to the first half, we are upgrading our forecasts by c 5%.


Music therapy

Update | Consumer Support Services | 10 Jan 2018

Growth in revenue and cash is strong after four months of trading. Focusrite continues to build on its leadership positions in international markets, and to benefit from its c 85% non-UK market exposure. Further growth in cash is also encouraging as it suggests good profit conversion despite expected cost increases. If these independent growth trends continue to the half-year, we would see upside risk to our forecasts.


Results exceed, strategy evolves

Outlook | Consumer Support Services | 21 Nov 2017

Focusrite, which already has market leadership in niche product areas, is evolving its strategy, to set up new brands targeting the professional interface and app markets. Focusrite has beaten our FY17 forecasts with 30% earnings growth, and we upgrade for the third time this year. With its attractive c 85% overseas revenue structure, we believe Focusrite is well placed in the short and medium term to sustain its independent strength.


Strong delivery with further potential

Update | Consumer Support Services | 03 May 2017

A number of factors have combined to produce excellent interim results for Focusrite: strong demand for its leading products, exposure to the buoyant US market, a promising result from sales to Amazon, good margin control, and a significant increase in cash generation. We are upgrading our forecasts, cautiously in view of consumer markets, although opportunities in the Far East and online represent potential upside.


Right focus

Update | Consumer Support Services | 20 Mar 2017

Focusrite has positioned itself in a way that makes its shares a particularly attractive investment: leadership in a niche product area protected from general consumer swings; an international market structure that makes it relatively currency agnostic; a habit of profit over delivery; a strong and further strengthening balance sheet; and an undemanding valuation. This first half trading statement confirms every one of those points.


Positive momentum on trading and cash

Update | Consumer Support Services | 10 Jan 2017

Trading for the four months to end December continued the positive trend of the first two to October. We understand that both constant currency trading and exchange rates have been favourable. Cash has also grown encouragingly, reflecting net receipts from the strong sales in late FY16 as well as early FY17. Recent softness in the shares represents excellent medium-term value for a niche market leader with positive growth.


Product quality and management depth

Flash note | Consumer Support Services | 07 Dec 2016

Yesterday Focusrite held a capital markets day, designed to showcase the range and quality of products and introduce operational management, which shares a passion for music-making and has deep knowledge of the products. This contributes to excellent product support, software innovation and thus customer loyalty, which should sustain the company’s brand leadership.


Second half strength supports the strategy

Update | Consumer Support Services | 22 Nov 2016

Focusrite has beaten our FY16 estimates, resulting in forecast upgrades. More importantly, perhaps, developments in the second half support our confidence in the strategy of expanding its markets and ranges with innovative and disruptive products. These include the successful launch of the second-generation Scarlett, confirming the sustained brand strength of the products, and the growing strength of the Far East where the company has a strategic geographical focus. We increase our DCF valuation to 214p.


Tuned in

Initiation | Consumer Support Services | 14 Sep 2016

Focusrite is using technology to tap into the growing popularity of both creating and recording live music. Understanding its customers as fully as its technology, it leads its field with products like Scarlett and Novation Launchpad. With a vision of making music-making easier, the growth strategy is based on expanding its markets and ranges with innovative and disruptive products, and it is already moving on to app and smartphone technology. It has led in its fast-developing product areas to date and is well equipped to continue, with added potential to move into new ones.


Making music easy

QuickView | Consumer Support Services | 27 Apr 2016

Focusrite continues to deliver solid growth supplying the changing music content creation market with a steady stream of well-received new products. Interim results showed a 3% increase in adjusted EBITDA (to £4.8m) despite increased marketing, and the board's confidence is demonstrated in an 8% dividend increase. With the company's experienced management team and excellent track record, we see potential for Focusrite to augment organic growth with complementary acquisitions at some stage. Yet based on consensus the FY16e EV/EBITDA is only 9.6x.