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(Sharecast News) - Analysts at Canaccord Genuity reiterated their 'buy' rating on Smiths News on Monday after the firm secured a second major longterm national contract, this time with Associated Newspapers, further strengthening its position in UK print distribution.
Canaccord Genuity said the new deal expands Smiths News's footprint with ANL to full national coverage from January 2028 and extends their partnership through to July 2037, giving the group strong longterm revenue visibility. Smiths News expects the agreement to generate around 105m of incremental annual revenue from 2028, with the two recently awarded national contracts together representing about 36% of the UK newspapers and magazines market.
The Canadian bank stated the ANL win materially deepens the longstanding relationship between the two companies and positions Smiths News as ANL's exclusive wholesale distributor across Great Britain. It follows the national contract awarded by News UK on 17 June, which was expected to add roughly 125m of annual revenue from July 2027.
Canaccord Genuity noted that both contracts will require previously flagged oneoff implementation and earlylife transition costs in FY27 as the group scales its network to support nationwide distribution. Delivery service charges for retailers will be frozen for the duration of the ANL agreement.
Management continues to expect returns on invested capital above the group's hurdle rate and earnings accretion from FY28. The expansion will be funded from existing cash and facilities, with the board maintaining its intention to keep ordinary dividends for FY26 and FY27 at or above the current consensus of 5.2p.
Canaccord added that the stock's valuation remains attractive, pointing to an August 2026E price-to-earnings ratio of 6.5x, a dividend yield of 7.9% and a free cash flow yield of 13.6%. It added that Smiths News holds a marketleading position with a diversified customer base and longrun contracts. The broker also reiterated its 95p target price on the stock.
Reporting by Iain Gilbert at Sharecast.com
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