Sage Group: H1 FY13 analysts' meeting feedback: putting the cash machine in action
NEUTRAL, Fair Value 355p vs. 330p (+2%)
We reiterate our Neutral rating but raise our DCF-derived fair value to 355p from 330p on revised medium-term lfl sales growth assumptions (+5% vs. +4%), as we estimate the 6% lfl growth target set for FY15 has become more credible than before. The business model is transitioning smoothly to subscriptions from perpetual licences and product rationalisation is well under way. That said, while Sage has put the cash machine in action with a special dividend of 17p per share to be proposed in June, we do not expect significant stock price upside potential in the coming months without the perspective of sizeable EPS-accretive acquisitions instead of just share buy-backs.
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