Gentrack shares retreat after surging on FY24 result
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The news: Shares in software provider Gentrack Group pared gains on the ASX after rocketing 28% on Tuesday following the release of the company's full-year results.
The numbers: Gentrack shares were down 3.5% to $11.62 by 2:30pm AEDT.
Analysts made the following revisions to their ratings:
- Morgan Stanley kept its 'overweight' rating and raised its price target from $12.80 to $13.50;
- Bell Potter retained its 'buy' recommendation and hiked its price target from $11.50 to $13.90;
- Shaw and Partners reiterated its 'buy' rating and increased its price target from $10 to $11.80; and
- Wilsons Advisory downgraded its recommendation from 'over weight' to 'medium weight' and lifted its price target from $11.50 to $12.50.
The context: Bell Potter said it is bullish on Gentrack's ability to maintain "customer win momentum" in both rest of world and core markets, supporting high non-recurring revenue (NRR) and flow on annual recurring revenue.
Bell Potter analyst Michael Ardrey noted that customer win momentum is underpinned by rapidly shifting energy consumption and production trends, driving increased complexity within the grids, which is meeting technical debt within legacy billing platforms.
Shaw and Partners said Gentrack remained a "top pick" and increased its FY26 EBITDA forecasts by 19% on growing potential for longer-term margin improvement.
Wilsons Advisory analysts noted that Gentrack's result "comfortably soothed" investors' key concerns around softening NRR. Its downgrade was on "valuation grounds" following the company's share price jump on Tuesday.
The sources: Morgan Stanley research, Bell Potter research, The Shaw research, Wilsons Advisory research
