LONDON (ShareCast) - (Sharecast News) - IT provider Kainos said on Friday that results for the year to the end of March 2021 are set to be at the upper end of consensus forecasts after the momentum outlined in its trading update in January was maintained.
The company said demand in both of its divisions - Digital Services and the Workday Practice - continued to be robust, both from existing and new customers, despite the uncertainty generated by the Covid-19 pandemic.

"We are grateful for the continued trust that our customers place in Kainos as we help in the delivery of their key digital transformation projects," it said.

"Looking ahead, our robust pipeline, strong balance sheet and significant contracted backlog underpins our confidence in the outlook. And whilst we are mindful of the ongoing challenges caused by Covid-19, we believe that we are well-positioned for further growth and remain confident in our strategy."

Kainos said that following strong recruitment, it now has 2,024 employees and contractors worldwide, which is an increase of 309.

At 0820 BST, the shares were down 5.8% at 1,598.05p.

Shore Capital said: "In the absence of a further upgrade today, and after the strong run up the shares had of late, there may be a 'pause for breath' moment at this juncture with the potential for some downside pressure (better to travel than to arrive?).

"At 1,691p, the group's stock has gained circa 39% year to date and 150% over the past 12-months, more than justifying our buy stance since last June, and now trades on 47x P/E and 35x EV/EBITDA for FY22F. While valuation may be a sticking point for some, as long as the earnings upgrade cycle continues, and we believe it still has legs into FY22, this should be less of a concern than at first it seems, in our opinion.

"In a recent note we pegged near term fair value around 1,700p, and while the stock is now around that level, we believe today's evidence of continued momentum, resilience and growth is highly supportive in our view. We shall review our forecast assumptions and update our near term fair value in due course."

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE