Technology

Technology equity research

Explore the most viewed and latest equity research and media content for companies within the Technology sector. Stocks in this sector focus on IT Services, Web Development, Software Development, and IT hardware.

Technology equity research

Stocks in this sector focus on IT Services, Web Development, Software Development, and IT hardware.

17 Oct 17

Nudge, nudge, Nobel prize for a small cap fan!

Further evidence that the shrewder investor prefers a smaller company, the Nobel Prize in Economics was awarded to Professor Thaler, an avowed fan of the smaller brethren. Back down to earth, all markets continue to make headway, with the smaller company indices continuing to lead the way. Despite the apparent deadlock in the Brexit process, life appears to carry on. The MPC meeting on 2 November and the Budget on 22 November may offer greater insight. In Share News & Views, we comment on recent updates from Cropper*, Halstead, Norcros, Tricorn* Walker Greenbank and Wincanton.

Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF PPIX SNX SPRP SQS TCN W7L

17 Oct 17

N+1 Singer - dotdigital Group - H2 growth acceleration; M&A in focus

With its exposure to a structural growth market, a highly recurring business model, consistent strong execution, healthy balance sheet and potential new avenues for growth, we believe dotdigital remains a core holding in the sector. It offers investors an attractive compounding growth stock with the potential for accelerated growth as it expands internationally and increasing prospects for M&A. The FY results (19% sales growth, 27% EBITDA growth and 32% EPS growth) showed another year of strong execution, with the H2 growth acceleration particularly pleasing. We remain confident of the group’s prospects.

Companies: Dotdigital Group

20 Oct 17

It’s now ‘when’ not ‘if’ for HomeSend

HomeSend, eServGlobal’s JV with Mastercard and BICS of Belgium, has always represented a very exciting prospect. With the backing of the giant credit-card agency, it stood a good chance of securing a significant share of the US$600bn global remittance market. With a relatively minimal cost base, the transaction volumes from even a tiny share would have delivered US$100m in earnings for eServGlobal’s 35% stake – and Mastercard’s 26% of the global credit-card market suggested a far greater share was possible. Now, after recent announcements, we realise: firstly, that the applicable market size was woefully underestimated; secondly, that its share will not be tiny but significant; and thirdly, that success for HomeSend is becoming a certainty. On the contracts already signed, HomeSend will generate revenue and profits of hundreds of millions of dollars; it is now simply a matter of when its transaction corridors go live and the commission streams ramp up. We understand that that, too, will be faster than thought.

Companies: ESERVGLOBAL

17 Oct 17

Guidance for sales trebling despite cash constraints

The trading update notes an A$200m pipeline of opportunities; however, prudent resource constraints have forced a slowdown in spending on the Fleet business roll-out with a knock-on impact to this year’s revenue and losses. Since the sale of the Off-Road business to Caterpillar, Fleet is the main revenue-driving division. On the back of this update, we are easing our Fleet - and therefore group - revenue and earnings forecasts for FY 2018 and FY 2019. Nevertheless, Seeing Machines is still demonstrating extremely strong sales growth, issuing guidance that it expects to more than treble revenue this year from A$13m to around A$40m, and then double this again in the year to June 2019 at c.A$80m. By then, OEM Automotive, Rail and Aerospace divisions should all be making strong sales contributions to augment the Fleet division growth.

Companies: Seeing Machines

17 Oct 17

N+1 Singer - RhythmOne - H1 Trading update

The Company has provided an update for H1. Revenues ($112-114m guidance) are tracking slightly lower than we had been looking for with gross margin higher by 1% point (at 38%) and OPEX lower resulting in EBITDA being not far adrift from our expectation ($1.5m to $2.0m guidance). The Company is guiding to meeting our full year $16m EBITDA expectation, in part because OPEX is expected to continue to be materially lower (US$87m for the full year). In order to meet our forecast the Company will need to still achieve our revenue objective although we flag there is still some scope for OPEX to surprise given the continuing consolidation of the operations and acquisitions. More cash has had to be invested in working capital (an issue in the industry at the moment) and there are some YUME acquisition related expenses (we estimate c$3m) also impacting cash (guidance of $37m rising to $50m at year end). The Company expects some recovery in working capital in H2. The shares have been drifting off during the YUME acquisition process. We expect the shares to recover as the process nears completion (due early 2018) and investors get confirmation the Company is tracking towards the delivery of the critical leap in profitability this year.

Companies: Rhythmone

19 Oct 17

N+1 Singer - Oxford Metrics - FY’17 slightly ahead, strategic plan on track

Oxford Metrics’ year end trading update highlights another strong period of delivery for the group, with FY’17 revenue and adjusted PBT both expected to be slightly ahead of expectations. Net cash at the year end of £9.8m is also ahead of our £9.4m forecast. FY’17 is the first year of the group’s five-year growth plan and both Vicon and Yotta are beginning to see the benefit of the increased investment in the year. Oxford Metrics continues to provide investors with an attractive mix of IP led, market leading technology and cash generation, with recent investments placing the group on an enhanced growth trajectory. Our Dec’18 SOTP calculation results in an intrinsic value of 72p, with further outperformance potential as the group utilises its strong balance sheet.

Companies: Oxford Metrics

20 Oct 17

N+1 Singer - IQE - Unexpected historic US tax bill

IQE has announced that during the course of a routine US tax filing exercise, unexpected prior year taxes due of c.£4.2m have been discovered. The identified taxes date back to 2013, when the group acquired the epitaxy business of Kopin. As a result of the September ’16 group re-organisation, it is believed that no similar tax liability arises in 2017. Alongside this announcement the group has confirmed that the VCSEL ramp up in Q3 is on track, giving us confidence in our full year forecasts. We do not expect to make any material changes to estimates and remain positive on the stock, with multiple programs expected to drive significant upgrades to our FY’18 estimates and beyond.

Companies: IQE

17 Oct 17

RhythmOne H1 trading statement/ inline with mgmt expectations/ focus on cash/ no

RhythmOne has issued a trading statement for H1 2018. Performance is in line with management expectations and revenues are expected to be $112-114m vs H12017 of $67m. These numbers are not LFL as they include Perk for the half and RadiumOne for a quarter. Gross profit margin was 38% which is up from last year and in line with my FY2018 expectations. The gross margins at Perk and RadiumOne are higher than old R1. Adj EBITDA is expected to be a profit of $1.5m -$2m.

Companies: Rhythmone

10 Oct 17

Outgrown its valuation and deserves a re-rating

While iomart’s share price is roughly where it was in 2013, it has since then doubled revenue and profits through a combination of organic growth and bolt-on acquisitions. Including potential future acquisitions (not in forecasts), we think it should maintain mid-teens growth in revenue and EBITDA consistent with the past few years making the shares attractively priced at 9.4x FY’18 EBITDA. This compares to other UK Technology midcaps at 16.0x on the same expectation of 15% EBITDA growth p.a. We initiate with a buy rating and price target of 430p.

Companies: Iomart Group

17 Oct 17

Microsoft relationship deepens

Two new product integrations with Microsoft Azure, together with the recently released Amazon AWS hybrid solution, add up to a meaningful strengthening of WANdisco’s credentials and platform for growth. We see scope for a significant acceleration in operationally geared growth, especially if the company can progress one or two of its tier one relationships into a strategic relationship akin to the one with IBM.

Companies: Wandisco

19 Oct 17

N+1 Singer - First Derivatives - Kx selected for dynamic pricing

First Derivatives has announced that Kx has been selected by Scientific Revenue as its real-time analytics platform for dynamic pricing. While this deal has no immediate impact on our estimates, we believe the revenue potential is significant. Moreover, it further highlights the ultra-high performance capabilities of Kx and its attractions to technology leaders addressing analytical challenges in environments characterised by large volumes of fast-moving data. We will revisit our forecasts and target price when interim results are released on 7 November.

Companies: First Derivatives

19 Oct 17

On track

The management has today confirmed that the company is on track to deliver full year expectations on revenues and profits. We note the progress in percentage of group Annualised Recurring Revenue (ARR) that are SaaS and cloud-based services, from 75% at constant currency in September 2016 to 83% in September 2017. Our valuation model, which employs a 15% discount to the average revenue multiple of the UK Fintech sector, continues to values the shares at 233p (206p). While the stock has outperformed the UK Fintech sector by 43% since the announcement of UBS Delta on April 7, 2017, it still sits at a 28% sector discount on an EV/2018 Sales basis.

Companies: Statpro Group

17 Oct 17

2H acceleration: progress on every front

Strong results from text book execution derive from delivery of the three strategic routes to growth: more partners, doubling the addressable market; increasing reach of successful operational territories, delivering 48% revenue growth outside the UK; and broader product functionality – leading to +24% spend per customer, from a growing stable of c4,000 active customers. FY17 revenue is in line with expectations, while EBITDA of £10.2m (vs £9.7mE) is 5% ahead; adj EPS is 9% ahead. Cash of £20.4m (£19.3mE) highlights 2H free cash flow of 108% of adjusted PBT, and a balance sheet with options open for further growth – increased investment through opex and capex; a well-covered dividend; and potential M&A to accelerate product development, or enhance organic growth in new territories through acquiring local presence. We lift our 12-month target price to 92p (80p), in line with the Megabuyte accounting and enterprise software peer group.

Companies: Dotdigital Group

04 Oct 17

N+1 Singer - Gresham Technologies - Trading in-line, new CTC win

Gresham issued a trading update indicating the group continues to trade in line with market expectations and remains of the full year outlook. In the period, the group signed 2 important new CTC clients – one, which was already announced on 29 Aug 2017 with a Tier 1 bank and another with the US capital markets division of one of Asia’s largest financial services firms. No change to forecasts, but this continued positive Clareti momentum in North America is highly encouraging as the region represents the largest opportunity for the group and will help further drive both earnings growth and earnings quality going forward.

Companies: Gresham Technologies

12 Oct 17

Setting the Stage

Full year results confirm PROACTIS’ healthy financial performance continues. Against a backdrop of excellent deal volumes, gross margins improved sharply and underlying cash generation was strong. More importantly these results set the stage for the next act in the story. The Perfect acquisition transforms the company into a global player, doubling its size, expanding the product portfolio and broadening the customer base. It is this deal that will drive financial performance in FY18 and beyond. The company confirms its synergy targets and we leave our FY2018E forecast largely unchanged.

Companies: Proactis

13 Oct 17

Executive interview - accesso Technology Group

19 Sep 17

Proxama plc (PROX) 2017 H1 results & trading update

03 Oct 17

Executive interview - GB Group

18 Sep 17

Capital Network's Ed Stacey on Corero Network Security

17 Oct 17

Executive interview - WANdisco

13 Sep 17

SQS - Half Year Results 2017

27 Mar 17

Executive Interview - IQE

01 Sep 17

Executive interview - EMIS Group

15 Sep 17

Capital Network's Ed Stacey on Proactis Holdings Plc

25 Jul 17

Executive interview - Osirium Technologies

28 Sep 17

Dillistone - Interim results & launch of GatedTalent.

21 Jul 17

Capital Network's Ed Stacey on BOS Global Holdings

02 Feb 17

FreeAgent - Company update 2017

13 Jul 17

Proxama (PROX) Proposed Placing. CEO John Kennedy Interview

29 Sep 16

Executive Interview - IQE

Latest Content

ESVSEEPLIFARNCSRTBTGAMSPHTMSYMDPHLGTEKFANCRRGDIMMVECAGYTSTLCTHBOTBDOTDVERBVXPSCLPABCFULDNLVLGHZDSHOECAKEC4XDSCSMTPHIDPRBGFISHHOTCJOULHCMMXCT

IQE

IQE slapped with unexpected £4.5m tax bill

The bill relates to the Group's acquisition of Kopin in January 2013.

View

20 Oct 17
-
-

Dassault Systemes

Acquisition of Exa in simulation software

Dassault Systèmes signed an agreement to acquire all the shares of Exa in the US at the end of September 2017. The tender offer, which represents $400m on a fully-diluted basis, was launched on 12 October 2017. Exa is specialised in solutions that solve fluid problems for customers in the automotive sector essentially, and the aerospace and oil sectors to a lesser extent. The company has a number of major customers in both sectors, such as BMW, Tesla, Toyota in automotive, NASA, Embraer in aerospace, British Petroleum in oil & gas. In 2016/17 (ended 31 January 2017), Exa had total revenue of $72.6m, o/w c.84% was derived from licence revenue, an adjusted EBITDA of $6.5m (adjusted for the stock-based compensation expense), reported EBIT of $0.4m and net losses of $-1.1m.

View

20 Oct 17
-
-

ESERVGLOBAL

It’s now ‘when’ not ‘if’ for HomeSend

View

20 Oct 17
-
-

IQE RNO SDL DPH PCIP

N+1 Singer - Morning Song 20-10-2017

Dechra Pharmaceuticals (DPH LN) AGM statement confirms all in line | IQE (IQE LN) Unexpected historic US tax bill | PCI-PAL (PCIP LN) Continuing compliance with PCI DSS and new contract win | Renold (RNO LN) Forecasts trimmed to reflect H1 update | SDL (SDL LN) CMD highlights: Technology key to long term competitive advantage

View

20 Oct 17
-
-

IQE

N+1 Singer - IQE - Unexpected historic US tax bill

View

20 Oct 17
-
-

SDL

N+1 Singer - SDL - CMD highlights: Technology key to long term competitive advantage

Enterprises’ desire to reach more and more customers across the globe, with more products and services, delivered faster and more flexibly is creating a significant opportunity for companies that can manage the content explosion challenge that comes alongside this growth. SDL’s Capital Markets Day focused on Helix and Artificial Intelligence/MT – key technologies that will allow it to manage the content globalisation process at scale, whilst delivering a better quality output and service to its customers more profitably. If these investments successfully help SDL achieve the best operating model in the market, the opportunity for value creation is significant given the growth in the market and the fragmented state of the competitive landscape. As always, the proof is in the execution, but with the shares trading on an undemanding 1.2x EV/Sales cal’18 and EV/EBITDA of 10.9x, the risk/ reward is highly attractive.

View