Canaccord raises target price on Netcall

Analysts at Canaccord Genuity raised their target price on software firm Netcall from 74.0p to 88.0p on Wednesday, stating it expects more good news to come following the group's "strong" first half.

Canaccord, which increased its adjusted earnings per share forecasts for Netcall by roughly 4% on the company's first-half trading statement earlier in February, now expects "a more permanent uplift" in adjusted underlying earnings margins, as the Intelligent Automation part of the group moves from a loss into profit.

The Canadian bank noted that Netcall's top line organic growth was 9% in the first half, a level it expects to remain steady in the 2021 and 2022 trading years, with the Liberty suite now over 95% of group and "other" legacy revenues below £1.0m per annum.

"We upgrade our target price to 88.0p (from 74.0p) because of our upgraded forecasts and the higher valuation attached to IA which is no longer loss-making," said the analysts.

Canaccord, which also reiterated its 'buy' rating on the stock, upgraded 2021 and 2022 full-year adjusted underlying earnings estimates by roughly 11 and 13% and adjusted earnings per share by 12 and 16% to reflect higher group margins.