Berenberg initiates Innoscripta at “buy,” citing strong growth and market lead

Berenberg initiated coverage on Innoscripta SE (ETR:1INN) with a 'buy' rating and a €200 price target, citing the company's early leadership in Germany's nascent but rapidly expanding R&D tax credit software market. Despite an 18% post-IPO share decline to €100.60, the firm projects robust financial growth, with revenues forecast to increase 58% to €102 million and EBIT to €54.9 million in 2025, driven by regulatory tailwinds and low market penetration. Innoscripta currently trades at a significant discount to peers (18.0x 2025 EV/EBIT vs. 38.2x median), presenting a compelling valuation given its scalable model and strong margins.

Analysis

Berenberg's initiation of coverage on Innoscripta SE (ETR:1INN) with a 'buy' rating and a €200 price target highlights a significant valuation disconnect. The company, a first-mover in Germany's nascent R&D tax credit software market, has seen its shares decline 18% post-IPO to €100.60, despite a robust fundamental outlook. This market is substantially underpenetrated, with only 28% of eligible firms having filed for credits, yet it is expanding rapidly, with claims growing from €20 million in 2021 to an estimated €1.1 billion in 2024. A key catalyst is a proposed legislative change to increase the R&D expense cap, which could directly boost Innoscripta's revenue per client. Financially, the company demonstrates a strong growth trajectory, with revenue forecast to increase 58% to €102 million in 2025, alongside a high EBIT margin of 53.8%. At a valuation of 18.0x 2025 EV/EBIT, Innoscripta trades at a steep discount to its peer group median of 38.2x, suggesting substantial upside potential even before accounting for the long-term forecasted revenue CAGR of 33% through 2029.

Key Decisions for Investors

• Given the stock's 18% post-IPO decline juxtaposed with strong growth forecasts and a significant valuation discount to peers, investors could view the current price as an attractive entry point.
• Investors should closely monitor the progress of the draft bill passed on June 4, 2025, as its enactment would serve as a primary catalyst, validating the thesis of an expanding addressable market.
• While the growth story is compelling, it is prudent to consider the risks of a newly public company, including execution on its high-growth strategy and the potential for increased competition in this developing market.