[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / January 24, 2017 / Success for a start-up is rarely a straight line. Production implementation difficulties affected Yowie's ability to fulfill orders in its December quarter. However, management is sticking to its long-range plans to build on its success in the US by pushing to expand the brand to two to three markets outside the US in FY17. While the expansion timetable is, in our view, more aggressive than that of similar start-up companies, we believe the investment spending and expansion tactics are quite conservative. Our model now includes our estimates for sales outside the US (OUS); however, it includes more modest revenue and profitability expectations for FY17-19, but we maintain our confidence in the company's long-term growth and profitability prospects.
Yowie shares have fallen 52% since our initiation, creating what we believe is long-term value. A reverse DCF at the current price with a WACC of 10% implies compound average annual top-line growth from FY17 to FY19 of 52%, fading to terminal growth of 2% and an undemanding terminal EBIT margin of 20%. Our forecasts include modest increases for roll-out to other geographies, allowing for upside. We believe there is further upside as Yowie demonstrates it can move beyond confectionary into licensing the brand for other products.
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