RWS Holdings – after poor looking results, I now predict that this group’s shares will double in price, now trading at 90p, brokers TP is 240p

27.06.2025

Yesterday RWS Holdings (LON:RWS) bought into the IP of Papercup – no this is nothing to do with drinking containers.

It is potentially a ‘magic’ deal that could help RWS transform its business going forward.

Papercup’s intellectual property creates its unique ability to reproduce a speaker's tone, pace and emotion faithfully.

Its technology combines state-of-the-art voice synthesis, thousands of unique AI voices and editorial tools for human language specialists to fine-tune the output - offering control and quality output comparable to human dubbing by actors and artists, at a fraction of the cost and turnaround time.

The Business

The £336m-capitalised RWS is a globally operating content solutions company, powered by technology and human expertise.

It grows the value of ideas, data and content by making sure organisations are understood.

It is aiming at a £32bn market size, with its in-house network of language specialists located across 193 countries.

The group’s proprietary technology, some 47 AI patents and its human experts help organisations bring ideas to market faster, build deeper relationships across borders and cultures, and enter new markets with confidence - growing their business and connecting them to a world of opportunities.

It's why over 80 of the world's top 100 brands trust RWS to drive innovation, inform decisions and shape brand experiences.

With 62 global locations in 34 countries, across five continents, its teams work with businesses across almost all industries.

Recent Results

Ten days ago, on Tuesday 17th June, the group released its Interim Results to end-March, showing a 2% fall in first-half revenues to £344.3m (£350.3m) with adjusted pre-tax profits down 61% to £18.0m (£45.6m), slashing half-way earnings by 60% to 3.6p (9.1p) per share.

However, a big pointer to better figures was shown by the group maintaining its 2.45p Interim dividend.

The reduced profits were predominantly due to the impact of £22m of non-trading items, including foreign exchange, increased amortisation, the impact of the sale of PatBase and an increase in the proportion of technology investment being expensed in the year, while the balance is due to the £6m gross profit impact of the mix changes.

Full Year Outlook

Reflecting the first half progress made on its ‘organic constant currency revenue’ in three of the group’s four divisions it looks for second half growth.

The group continues to expect to deliver adjusted pre-tax profits in the range of £60m-£70m for the full year to end-September 2025.

Analyst Views

Analyst James Bayliss, at Berenberg, has a Buy recommendation out on the group’s shares, with a Target Price of 240p.

He considered that the first-half results showed continued growth momentum, with revenues up 1.4% and profit-before-tax of £18m, just above the £17m that was included in its guidance.  

Bayliss viewed that:

“The most important announcement was the new growth strategy, which aims to drive accelerated growth, high quality earnings and margin accretion over the medium-term.

We think this new, simplified messaging and go-to-market strategy around RWS’s value-add proposition should be well received by investors, while also marking impressive progress under new chief executive Ben Faes, who joined in January 2025.

With clear upcoming milestones as the strategy is put into action and new key performance indicators and medium-term guidance are announced, we think a valuation of 6.9 times full-year 2026 price-to-earnings and 3.5 times full-year 2026 enterprise value/Ebitda offers an attractive opportunity for investors as the equity story rebuilds momentum.”

In My View

I feel that the shares of RWS are set to double, possibly before the 2025 calendar year is over.

This time last year this group’s shares were trading at 197.60p, they have since been oversold down to 60.80p and are now just 90p, which I consider is a cracking entry price for new investors.

As the recovery momentum continues its shares will soon be heading strongly back up again.