Reach PLC 

Reach PLC (LSE: RCH) is an FTSE All-Share listed entity and the largest commercial news publisher across the UK & Ireland and home to more than 130 trusted brands. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 82.85

• Resistance near Current levels: RCH’s stock price was in the downtrend forming lower lows and lower highs and recently showed some strength which brings it to the near-term resistance, which could lead to a 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 Margine: The Gross margin of RCH was 36.1% in H1 FY23, against the industry median of 59.5%. The EBITDA margin of the company was 16.1% during H1 FY23 when compared to the industry median of 16.6%. Further, the Net margin of RCH slipped to 1.6% in the reported period (H1 FY23) when measured against the industry median of 6.7%.
• Deteriorating liquidity profile: The group’s quick ratio for H1 FY23 was reported at a lower level of 0.79x, as compared to the industry median of 0.97x. Also, the current ratio of RCH was 0.88 during H1 FY23 against the industry median of 1.08 x
• Expensive Valuation: The stock of RCH is currently offered at 18.4x on Price/Book-value-based relative valuation (NTM) as compared to the industry (Consumer Cylcicals) median of 1.5x.

Share Price Chart  

Conclusion

Based on the macroeconomic challenges, and price action stance, a "SELL" recommendation on Reach PLC (LSE: RCH) has been given at the closing market price of GBX 82.85 (as of 26 September 2023).

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 26 September 2023. 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.

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