Berenberg initiates coverage on Idox at 'buy'

Analysts at Berenberg initiated coverage on software specialist Idox with a 'buy' rating and 81.0p target price on Thursday, citing an attractive geo-spatial opportunity.

Berenberg said Idox management have completed the "walk, run, fly period" of the group's growth strategy, which has "significantly improved" the quality of the underlying business and repositioned it around high recurring revenue and higher growth verticals, most notably the geospatial opportunity.

"Management is now fortifying the foundations and focusing on and cultivating Idox's future trajectory. A number of acquisitions since 2021, most recently Emapsite, has created a platform to enable Idox to address the attractive geospatial opportunity," said Berenberg.

The German bank noted that its forecasts imply the business will deliver 7% adjusted earnings per share compound annual growth for FY24-26.

"Our FY24E adjusted EPS forecast is in line with consensus. In that context, we view 23.5x FY25E P/E as attractive, and we initiate coverage with a 'buy' recommendation and a price target of 81.0p, which implies 31% upside from the current share price," added Berenberg.

Reporting by Iain Gilbert at Sharecast.com