The Hipages Group Holdings Ltd (ASX: HPG) share price has been a disappointing performer since listing on the Australian share market in November.
The online platform and software as a service (SaaS) provider's shares ended the week at $2.13. Which means they are down 13% from their listing price of $2.45.
What is Hipages?
Hipages is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers. It currently has 36,000 tradies subscribed to the platform.
Based on the number of jobs posted, it is the leader in the on-demand tradie economy. The company notes that to date, over three million Australians have changed the way they find, hire, and manage trusted tradies with Hipages.
Approximately $40 million in gross proceeds was raised through its initial public offer (IPO). These funds will be used to drive future growth through investment in its brand and technology platform, as well as its expansion into new channels and adjacent opportunities.
Is the Hipages share price in the buy zone?
According to analysts at Goldman Sachs, the recent weakness in the Hipages share price has dragged its shares down to an attractive level.
This morning it initiated coverage on the company with a buy rating and $2.90 price target. This price target implies potential upside of 36% from its last close price.
Goldman Sachs is a fan of the company due to its belief that in can grow its revenue and particularly its operating earnings strongly over the coming years.
It commented: "We forecast a FY20-FY23E revenue CAGR of 12%, broadly in line with market growth. However, we forecast a materially stronger EBITDA CAGR of 36% as HPG drives improving returns on its sales and marketing spend (brand investment) and further refinements in marketplace efficiencies (balance between the number of tradies on its platform and higher quality job listings)."
"We value HPG based on a 50:50 weighting of EV/EBITDA (FY21 EBITDA Multiple of 25.7x benchmarked to peers, applied to FY22E EBITDA) and a 10-year DCF (WACC 8.9%, TGR 2.5%, revenue CAGR 11.4% and a terminal year EBITDA margin of 39%). This derives our A$2.90 12m target price," it concluded.
