Canaccord Genuity raises target price on Kainos

Analysts at Canaccord Genuity raised their target price on software firm Kainos from 1,350.0p to 1,525.0p on Monday, stating the group was "not slowing down".

Canaccord Genuity, which has a 'buy' rating on the stock, noted that following Kainos' "very strong" trading performance, flagged during its September update, reported sales rose 26% in the first half to £180.0m.

As a result, Canaccord raised its sales estimates by 5%, with the implied 19% year-on-year growth in the second half "well underpinned by backlog".

"Our adj. EPS estimates for the current financial year are upgraded by 3%. We have also trimmed our FY25E free cash flow and net cash estimates by ~£16m to account for the planned new headquarters," said the Canadian bank.

"Our thesis remains unchanged - after digesting post-COVID cost and margin headwinds in FY22, Kainos is now firmly back on a double-digit EPS growth path. In a bull case scenario where we assume the company continues on the current trajectory (+19% revenue CAGR) we see three-year bull case upside potential to £19/share (FY26E EPS of 76p @ 25x P/E)."

Reporting by Iain Gilbert at Sharecast.com