Focusrite - Marching on

Focusrite has issued a reassuring trading update for H120. Sales growth is in line with expectations, against a tough comparative. With the majority of sourcing from Asia, there had been fears about its ability to continue sourcing product to satisfy consumer demand, which still looks ‘buoyant’, but deliveries have resumed quickly. Our underlying forecasts are unchanged, but we incorporate the acquisition of Martin Audio, leading to EPS upgrades of 1% for FY20 and 7% for FY21. The recent de-rating has brought multiples back towards historic averages: EV/EBITDA for FY20e of 12.2x (average of 11.1x) and P/E for FY20e of 19.5x (average of 17.8x).