Canaccord Genuity raises target price on Kainos

Analysts at Canaccord Genuity raised their target price on software firm Kainos from 1,765.0p to 1,880.0p on Monday, pointing to continued growth momentum and normalising margins.

Canaccord said Kainos, which raised full-year revenue expectations in September, had shown that its "impressive run" of sector-leading double-digit growth had continued in its interim results, with organic sales up 32% year-on-year

Furthermore, the Canadian bank highlighted that backlog growth had accelerated to 38%, of which digital services was up 29% year-on-year, while workday services grew 39% and smart services shot up 67%

"This provides very good visibility on our raised 2H22 estimates, which now imply potentially conservative +21% yoy growth and 26% for the full year," said Canaccord, which reiterated its 'hold' rating on the stock.

"The strong >25% organic revenue growth in our view warrants a premium, but considering muted expected EPS growth this year we see limited scope for multiple expansion."