K3 Capital Group PLC

K3 Capital Group PLC (LON: K3C) is an FTSE AIM All-Share index listed UK professional services firm providing advisory services to SME’s.

Investment Rationale – SELL at GBX 295.00

• Profit Booking: The company’s share price reflected a jump of ~21.40% in the past 1 month and presents a case of profit booking for the investors according to their risk appetite.
• Macro Concerns: The current macro condition has been very volatile in nature owing to the confluence of record inflation levels, hike in the interest rate, and geopolitical instability which might put pressure on the equity markets in 2022.
• COVID-19 Impact: The pandemic has caused temporary reductions and delays in R&D claim processing.
• Technical Indicator: The stock of the company is trading at a high RSI level of ~75.04, indicating overbought stance.

One Year Share Price Chart

(Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY23E) (Illustrative)

Conclusion

Based on the attractive notional gains in the short-term, macroeconomic instabilities, COVID-19 impact, bearish technical indicators, coupled with the unfavourable Valuation conducted above, we have given a "SELL" recommendation on K3 Capital Group PLC at the current market price of GBX 295.00 (as on 30 May 2022, at 09:20 AM GMT+1). 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that 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 scenarios.

Note 4: ‘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 5: Dividend Yield may vary as per the stock price movement.

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