Berenberg lowers target price on Craneware

Berenberg stated that while Omicron-variant-based headwinds affected services revenue at Craneware during the first half of its trading year, it believes that the interim results will provide "more confidence" to investors.

The German bank said Craneware has "a high degree of revenue visibility" and its margin performance was exceeding expectations as "strong organic growth opportunities" were beginning to materialise.

"As Craneware's valuation is now the cheapest it has been in over five years, we believe the risk/reward on the stock is highly favourable," said Berenberg.

"Cost synergies that have been delivered ahead of schedule mean Craneware achieved a 28.75% EBITDA margin during the period. This is better than our expectations and was achieved during a period of cost inflation across the tech industry. Given that our FY22 EBITDA margin forecast is 29.3%, we believe any further cost synergies would drive upside to this. We have previously highlighted that there is as much as 20% upside to our current estimates from cost synergies."