Canaccord Genuity hikes target price on Cerillion
By Iain Gilbert
Date: Monday 22 Nov 2021
(Sharecast News) - Analysts at Canaccord Genuity materially raised their target price on software firm Cerillion from 665.0p to 950.0p on Monday following the firm's "very impressive" full-year 2021 performance.
Canaccord Genuity highlighted that Cerillion had seen sales organically increase 25% in the year, while adjusted underlying earnings had smashed through market forecasts with year-on-year growth of 81%.
The Canadian bank also pointed out that Cerillion's October trading statement indicated "a very strong set of FY21 results" and while it acknowledged that the company's shares had risen "substantially" as a result, it doesn't think they had "re-rated materially".
"We upgrade on the back of an increasing order bank, tempered somewhat with the expectation that gross margin should decline somewhat from the FY21 level, as the percentage of high margin software licences in the mix decreases to more normal levels," said Canaccord.
The analysts, who maintained their price-to-earnings premium versus the UK sector at 15-20% given that top-line growth and adjusted EBIT margins were now both materially above the sector average, also reiterated their 'buy' rating on the stock.
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