DAVY VIEW

Led by its charismatic founder Steve Oliver, musicMagpie plc (MMAG) is a simply wonderful business. The early stage, re-conditioned smartphone rental business appears to be the right business model at the right time. Yet, we have a sense that there is a little conservativeness in the culture and perhaps too much focus on driving EBITDA margin at this stage, given the nascent but very material addressable markets in the UK and the US. We would advocate driving higher revenue growth and initiate coverage with a ‘Neutral’ recommendation.