SRH AlsterResearch AG Update: wallstreet:online AG - Strong environment should support growth

SRH AlsterResearch AG Update: wallstreet:online AG - Strong environment should support growth

Nachrichtenquelle: AlsterResearch AG
11.02.2021, 14:08  |  212   |   |   

Strong environment should support growth; Price target up


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Strong environment should support growth; PT up Recently brokerage peers raised their guidance on trading volumes and customer growth. This corresponds with reports from L&S Exchange and Tradegate, which show elevated trading volumes and transactions for December, as well as indicating stronger than expected growth in January. Further, customer metrics hint to rising activity and customer growth among younger clientele. This is very much consistent with the current events regarding GameStop. As this hot topic fuels public awareness on stock markets and neo brokers in particular, the trading restrictions set up by competitors like Trade Republic turns Smartbroker even more so into the spotlight, as Smartbroker took a more customer-centric approach allowing continued trading. With regards to the portal business, reports from online advertisers showed strong results driven by recovering retail ad spending. In light of that we expect w:o to deliver a strong finish to FY20E and sustained growth in FY21E. Model adjustments: Given the aforementioned as well as the fresh spotlight on neo brokers we assume higher customer growth for Smartbroker (FY21E: 185k, old: 167k). This should be partially driven by a growing number of younger customers, supported by the envisaged rollout of the new front-end and a new trading app. While margin development for FY21E should remain muted due to product investments and marketing expenses the customer growth will translate in stronger top- and proportionate bottom-line growth. Conclusion: In essence, the environment for w:o looks very supportive and we are strongly confident that the company will leverage on this. We believe that w:o will benefit from continued marketing efforts and planned improvements (modernizing front-end, release of a native app) in terms of dynamic user growth, trading activity, revenues and ultimately earnings growth. This is supported by the profitable portal business where w:o holds a strong market position. Its reach into a homogenous and affluent target group helps promoting its brokerage service and gain market share. Based on our updated valuation models (e.g. DCF and FCF) we arrive at a fair value of EUR 26.00 (old EUR 17.00) reiterating our BUY recommendation.

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SRH AlsterResearch AG Update: wallstreet:online AG - Strong environment should support growth Recent market data on trading volumes and reports from exchanges and peers paint the picture of a strong Q4. This is reflected by high market activity and the momentum is expected to remain high. The recent industry news strengthens our confidence that the company will be able to disproportionately benefit from this stellar growth expectations.


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