Trading update underlines consistency
In a trading update ahead of this week’s Capital Markets Days, Gamma has announced that EBITDA for the year ended 31 December 2018 is anticipated to be at the top of the range of market expectations with revenue and adjusted EPS in line with consensus. This reflects strong demand for its key UK products. The channel showed further growth with more contract wins while the direct business also signed ‘significant’ new contracts. Gamma’s new “Collaborate” product will launch later in Q1 2019. The integration of Dean One in the Netherlands (acquired in October 2018) is progressing ‘in line with expectations’. In December, Dean One launched Mobile Wholesale, a strategic partnership with T-Mobile. The Group has also formed Gamma Ireland. Given that we are at the lower end of the consensus range for EBITDA and EPS (although mid-range on revenue), we take this opportunity to adjust our margin assumptions and upgrade our Adj. EBITDA estimates by 5%-6% over our forecast horizon. That produces a 6%-10% increase in our Adj. EPS estimates.