Marlowe PLC (LSE: MRL)

Marlowe PLC (LSE: MRL) is a FTSE AIM 100 listed software and business services company assuring regulatory compliance. The service portfolio is segmented into Inspection & Certification, Governance, Risk & Compliance (GRC) and testing. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 582.00

• Profit Booking: MRL’s stock price has breached the R2 level suggested in the previous report published on 30 April 2024. Considering the market conditions and the price action, it is prudent to exit the stock and book profit.
• Short-Term Profitability: MRL’s profitability falls short relative to the industry’s estimates with net margin of negative 3.7% in H1 FY24 against an industry median of 4.2%. Also, the group’s EBITDA margins dropped down by 50bps from H1 FY23 due to slight compression in Occupational Health and dilutive impact of bolt-on acquisitions.
• 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

Share Price Chart  

Conclusion

Based on the notional gains, sluggish profit margins, aggressive M&A transactions during H1 FY24, and price action stance, a "SELL" recommendation on Marlowe PLC (LSE: MRL) has been given at the closing market price of GBX 582.00 as on 22 May 2024.

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 22 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.