Berenberg has lowered its rating on GB Group Plc to hold from buy and reduced its price target to 190 pence from 260 pence, citing elevated competition in the U.S. identity verification market and a lack of visibility in GBG’s business model.
The bank also trimmed its fiscal 2027 revenue growth forecast to 1%-3% from mid-single digits, following an unscheduled update from GBG on August 14 that downgraded its full-year performance expectations. Operating margin guidance was adjusted to about 21%, down from a previous range of 21%-22%, while only 42% of fiscal 2026 revenue came from term-based subscriptions.
Berenberg reduced its multi-year estimates for GBG, cutting fiscal 2027 revenue by 3%, fiscal 2028 revenue by 5%, and fiscal 2029 revenue by 7%. Adjusted operating profit estimates were lowered by 7% for fiscal 2027, 6% for fiscal 2028, and 10% for fiscal 2029.
GBG’s gross margin has declined from 77.4% in fiscal 2018 to 69.5% in fiscal 2026, while its fiscal 2027 free cash flow yield is projected at 9.3%. Shares closed at 160 pence on September 1, valuing the company at £381 million.
Analysts highlighted the competitive pressure from U.S. rival Socure, which reported annual recurring revenue of $364 million in the second quarter of 2026, up 63% year-on-year, alongside a 0.01% logo churn and 133% net dollar retention.
