Teather & Greenwood ‘Broker Network’s growth prospects reinforced’

Teather & Greenwood’s Stephen Thomas has upgraded forecasts and reiterated his buy stance on Broker Network, the acquisitive operator of a network of independent insurance brokers. This move followed strong preliminary results and the acquisition of a pair of general insurance brokers. Bossed by chief executive Grant Ellis, AIM-listed Broker Network posted 63 per cent turnover growth to £7.6 million last year, with profits perking up from £800,000 to £1.77 million. Thomas predicts a jump to £2.3 million this year, leaving the 109p shares trading on a modest forward multiple of 10.3. He insists Broker Network is achieving critical mass and has good prospects for further strong growth.

Colleague Adam Lawson retained his buy stance, ‘albeit speculative’, on software outfit Mondas, despite delays to revenues from its relationship with HSBC. Mondas beat T&G’s forecast profit for the year to April. Although Lawson downgraded 2006 earnings from 2.9p to 1.9p, he says the forward rating of 12.1 times looks undemanding. However, ‘if this business does not find a way to achieve the critical mass it desperately needs, the market is likely to lose patience with the stock,’ he warns.

Elsewhere, respected leisure analyst Nigel Popham urged investors to climb aboard Mid-250 pubs group Greene King, which has grown in critical mass through last year’s acquisition of the Laurel neighbourhood estate for £654 million. Popham says the shares, on a forward multiple of 12, have a reasonable yield and good upside potential.