Shearwater Group – capitalised at £14m, cash £5m, looking to double profits this year, the shares up 27% yesterday at 59p, still offer big upside, brokers TP 78p

Mark Watson-Mitchell
Jul 10
4 min read

10.07.2025

Yesterday the Shearwater Group (LON:SWG) announced a Trading Update for its 15-month trading period to end-June – it shows that it is fast recovering, suggesting that its shares offer some good upside.

The cybersecurity, advisory, and managed security services group, stated that the need for the group's services continues to grow as organisations seek to navigate an increasingly complex cyber threat environment, with the costs of failure well-publicised over recent months.

The improved outlook and growing pipeline of opportunities provides confidence in the ongoing delivery of growth in both revenue and EBITDA in FY26.

The group stated that it delivered a strong performance in the 9-month period since the announcement of H1 results, bolstered by a number of major contract wins and renewals within the Services segment of the business.

As a result, FY25 revenue and adjusted EBITDA are anticipated to be slightly ahead of market expectations, with expected revenue of c.£41m, representing an annualised year-on-year increase of around 45% (FY24: £22.6m), and expected adjusted EBITDA of c.£2.2m, an annualised year-on-year increase of some 100% (FY24: £0.9m).

The Business

The £14m-capitalised Shearwater Group is an award-winning group providing cyber security, managed security and professional advisory solutions to create a safer online environment for organisations and their end-users.

Operating through four offices and servicing clients in some 50 countries globally, the group's differentiated full-service offering spans identity and access management and data security, cybersecurity solutions and managed security services, and security governance, risk and compliance.

Its growth strategy is focused on building a scalable group that caters to the entire spectrum of cyber security and managed security needs through a focused ‘buy-and-build’ approach.

With 90 employees, the company's segments include Software and Services.

The Software segment designs and builds software to help clients secure and make their corporate environments compliant.

The Services segment delivers the company's managed security and cyber solutions, test, advisory and consultancy as well as its strategically selected third-party partners' technical solutions.

Its solutions include cyber, security and monitoring; data discovery; identity and access security; penetration testing and red teaming; risk management advisory and assurance; security operations centre; IR35 solution; mind security; and artificial intelligence (AI) driven endpoint protection.

The company's cyber, security and monitoring solutions include SecurEnvoy, Brookcourt Solutions, and Pentest.

Its data discovery solutions include regulatory compliance, digital transformation, data subject access requests.

Trading Update Management Comment

CEO Phil Higgins stated that:

"We are delighted to report a strong period of trading with significant growth delivered in both revenue and adjusted EBITDA.

Organisations across both public and private sectors are facing an ever-increasing cyber-security threat and the costs of failure have never been more apparent than over recent months.

Our Group Companies are all highly respected in their fields and together provide a unique blend of solutions to help organisations navigate this threat.

In this context, we enter FY26 with a strong pipeline and an expectation of delivering further growth in the year ahead."

The Equity

There are some 23.8m shares in issue.

The larger holders include L Jones (12.3%), Philip Higgins, CEO (11.1%), Schroder Investment Management (10.8%), Dene Stacey (8.8%), and David Williams, Chmn (6.8%).

Broker’s View

On the back of the Trading Update, analysts Edward Stacey and Kimberley Carstens, at Cavendish Capital Markets, increased their estimates.

“We are increasing our revenue FY25E by 5.1% and EBITDA by 11.1%.

The trading statement refers to a positive demand environment and a strong order pipeline.

We believe the statement supports our FY26E and make no change to our FY26E forecasts.

We maintain our 78p target price.”

Their upgraded estimates for the 2025 extended trading period are for revenues to rise to £41.0m (£22.6m) while it swings from a £0.63m loss to an adjusted pre-tax profit of £0.6m, lifting earnings per share to 2.4p (0.26p).

For the year now underway to end-June 2026, the analysts go for £35.5m, with £1.1m profits and 4.5p per share in earnings.

My View

As the brokers note that driven by continually escalating tactics from cybercrime groups, growing complexity in threat environments, and increasing regulatory requirements and standards, the demand environment for cyber security providers is highly robust.

I refer readers to my comments on Tuesday 27^th November last year, when I suggested:

“It is coming out of the rough and is now ready to play down ‘a fair lane’ going forward.

Recent contract wins, together with its strong pipeline for the second half-year, should help to support the group’s share price, currently just 33.50p, valuing the business at only £9m.

This group, I must warn readers, has only once performed close to my set Target Prices, so perhaps it is best to gain a ‘second opinion’ if you are thinking of following my views, but I have to say that I do like the business and consider it to be undervalued.”

This group’s shares look too cheap to ignore as its recovery continues.