Canaccord Genuity hikes target price on Cerillion

Canaccord Genuity said a "solid first half" offered scope for upside to its forecasts for Cerillion and stated its FY24 trading update meant the group's streak of double-digit organic growth at more than 40% operating margins and beating consensus expectations had continued.

The Canadian bank, which reiterated its 'buy' rating on the stock, pointed out that in "a volatile macro and soft telco spending environment", Cerillion had continued to deliver upside to consensus, mid-teens double-digit organic growth and roughly 20% last twelve months free cashflow margins, making it one of only a few close to "Rule of 40" stocks in UK SMIDcap software.

"Our new £20 target price is based on a 36x CY25E P/E multiple," said Canaccord Genuity. "This puts the company towards the upper end of the peer group and is justified by continued double-digit growth, strong FCF margins and consistent delivery of upside to consensus forecasts."

Reporting by Iain Gilbert at Sharecast.com