TechnologyOne rises as analysts upgrade stock
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The news: TechnologyOne gained on the ASX a day after the enterprise software provider lifted its half-year profit and dividends, while analysts upgraded their ratings on the stock.
The numbers: Shares in TechnologyOne were up 7.6% to $18.02 by 1:00pm AEST, having closed 5.06% higher on Tuesday.
Macquarie analysts upgraded their rating on the stock to 'outperform' from 'neutral' and hiked their price target 13% to $18.30.
Bell Potter analysts retained their 'buy' recommendation and lifted their price target 3% to $19. Likewise, Wilsons Advisory analysts kept their 'overweight' rating and increased their price target 6% to $19.31.
UBS analysts left their 'neutral' rating unchanged but raised their price target 5% to $17.20.
However, Morgan Stanley kept its price target at $14.50 as it believed shares were now fully valued.
The context: Macquarie analysts upgraded their rating on TechnologyOne, noting that the company's result provided "additional conviction" in software as a service (SaaS) to drive medium-term growth, particularly in the UK where it is central to its go-to-market strategy.
Bell Potter analysts said that TechnologyOne's full-year guidance range of between 12% and 16% profit before tax growth — compared to previous typical guidance of between 10% and 15% — was the "positive surprise" of the result.
Wilsons Advisory analysts reiterated their 'overweight' rating, seeing a "solid" second-half with modest upside risk to TechnologyOne's guidance.
UBS analysts, meanwhile, cited traction with production initiatives and profit outlook as TechnologyOne's key positives. However, they maintained their 'neutral' rating on the belief that the stock is currently appropriately priced.
However, Morgan Stanley said that while revenue and profit before tax (PBT) was slightly higher compared to its expectations, its FY24 PBT guidance was around 2% below its forecasts.
The sources: Macquarie research, Bell Potter research, UBS research, Wilsons research, Morgan Stanley research
