NCC Group PLC  

NCC Group PLC (LSE: NCC) is an FTSE All-Share Index listed leading independent global cyber security and resilience adviser that serves over 1,500 clients worldwide. The Company has a significant market presence in North America, continental Europe, and the UK. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 145.60

• Resistance near Current levels: NCC’s stock price crossed the Resistance (R2) which was stated in the previous report on 12 January 2024 and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Sluggish Profitability Margins: In H1 FY24, the Gross margin of NCC was 38.0% against the industry median of 74.4%, and the net margin slipped to negative 1.3% in H1 FY24 versus the industry median of 6.3%.
• Expensive Valuation: The stock of NCC is currently offered at 10.2x on EV/EBITDA-based relative valuation (NTM) as compared to the industry (Technology) median of 8.8x. On Price/ Earnings-based relative valuation (NTM), the stock is valued at 19.7x which is higher than the industry median of 16.5x.
• Macroeconomic Risk: The market sentiments can remain weak in the short-term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/Earnings Approach

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on NCC Group PLC (LSE: NCC) has been given at the Current Market Price of GBX 145.60 (28 May 2024, 08:05 AM GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 28 May 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.