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Avast advances on full-year guidance

The group expects adjusted revenues to sit at the upper end of its previously guided range
August 14, 2019

Shares in Avast (AVST) – which floated in May 2018 – hit an all-time high on release of its half-year numbers. Key to the cyber security group’s performance was its core consumer direct desktop business. Here, adjusted revenues rose by 9.5 per cent to $308m (£255m) – underpinned by the cross-selling of privacy products and performance products.

IC TIP: Hold at 356p

Overall, adjusted revenues increased by 5.8 per cent, reaching $427m. Avast notes that the difference between its statutory and adjusted top line is “diminishing”, as the effects of non-cash historical adjustments stemming from the acquisition of AVG Technologies in 2016 decreases.

Encouragingly, Avast has raised its full-year expectations for desktop from high single-digit to low double-digit revenue growth. In turn, management thinks that group like-for-like revenue growth will land at the upper end of its previously cited high single-digit percentage range.

True, the smaller consumer direct mobile business endured an 8 per cent contraction in adjusted revenues to $38.3m. Performance here was tempered by the ongoing impact of the loss of Avast’s contract with carrier Sprint in 2017. But the group has also enjoyed growth in multi-device licences, which – despite spanning desktop and mobile – are predominantly accounted for within the former segment.

Broker Morgan Stanley expects adjusted EPS of 30¢ in 2019, up slightly from 28¢ in 2018.

AVAST (AVST)   
ORD PRICE:356pMARKET VALUE:£3.48bn
TOUCH:355-357p12-MONTH HIGH:360pLOW: 225p
DIVIDEND YIELD:3.0%PE RATIO:22
NET ASSET VALUE:98¢NET DEBT:114%
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2018**38975.418.00.0
201942514412.04.4
% change+9+91-33-
Ex-div:12 Sep   
Payment:11 Oct   

*Includes intangible assets of $2.2bn, or 227¢ a share

**Avast floated in May 2018

£1 = $1.21