DX Group (AIM:DX) – Cantor initiates coverage highlighting the ‘potential’ value
Cantor Fitzgerald has initiated coverage on the parcel, mail distribution & logistics company suggesting that the depressed share price and valuation have priced-in too much restructuring risk and not enough of the potential upside. With the share price continuing to tumble there are clear concerns out there – when will we reach support?
Cantor observes that the Group is making steady progress developing new services for its customers and restructuring operations. Profit margins are starting to improve and free cash generation is strong - £4.7m in the first half isn’t bad. The group still faces challenges including managing the ongoing decline in its core document exchange business, however the current rating at 7.5x current year 2015 estimates seem to factor that in and more, you can also pick up a tasty 7% yield (forecast cover 1.8x), assuming the dividend can be supported . There are evident concerns that estimates are way adrift which…