Shares in Hipages Group Holdings Ltd (ASX: HPG) have risen sharply in recent days following the company's delivery of a solid set of full-year results, but analysts at Shaw and Partners believe the stock has much further to go.
The broker has reiterated its buy recommendation on the stock and has a very bullish share price target on the company, which I'll get to shortly.
First, let's look at the company's results.
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Solid profit result
Hipages earlier this week reported revenue of $90.6 million, up 9%, while net profit of $15 million was up 528%.
Chief Executive Officer Roby Sharon-Zipser said of the result:
FY26 was another year of strong execution for hipages Group, as we continued to invest in our multi-product platform, adding new functionality, AI integration and expanding hipages for business, which drove strong customer engagement and a further 9% increase in ARPU. We also expanded into Insurance with the acquisition of a majority stake in VIZ Insurance. This expands our total addressable market and adds a complementary insurance offering to our business platform. Our strong free cash generation and balance sheet enabled us to commence an on-market share buy-back of up to 10% of issued share capital during the year, with our shares trading well below intrinsic value, while retaining flexibility to invest in future organic and inorganic growth opportunities.
On the outlook for FY27, the company said embedding AI across its operations would be a focus, while it remained open to further M&A.
Hipages is guiding to revenue growth of 9% to 11% and free cash flow of $11 to $13 million, up from $9.4 million in FY26.
Shares looking cheap according to broker
Shaw and Partners said in a note to clients that Hipages continues to evolve beyond its core marketplace into a multi-product platform.
They said that VIZ Insurance adds about 4,500 businesses to the platform, while AI tools for accounting and finance, as well as household products, would provide further optionality.
Shaw and Partners added:
Importantly, AI and future verticals contribute little to FY27 guidance, but successful adoption could accelerate growth beyond the core business's ~8–10% trajectory from FY28. We reiterate our Buy rating but lower our price target to $2.00 (was $2.50), reflecting more conservative long term revenue growth assumptions, driven primarily by lower volume growth. At the current price, HPG trades on just 1.0x FY27 enterprise value/revenue, which we believe materially understates the value of the platform given its improving profitability and free cash flow generation.
Hipages is valued at $126.3 million.
