Software AG: Q3 2013 EBIT in line, FY 2013 guidance confirmed at the low-end of the range
BUY, Fair Value EUR30 (+16%)
This morning Software AG has reported Q3 2013 earnings in line with forecasts, despite sales 3-4% below expectations due to seasonally weak ETS licence revenues. In contrast, the BPE division delivered strong growth on the licence side as expected (+31% at cc) thanks to two megadeals. Unsurprisingly, management cautiously reiterated FY 2013 guidance at the low-end of the range, thereby taking into account the five acquisitions made over the year. We expect no significant share price reaction today as the company has roughly delivered on plan, while we expect a return to positive lfl revenue growth from Q4 2013 or 2014 and no pick up in EBIT margin before 2015.
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