Panmure Gordon reiterates hold on Sage

On the upside, the business software provider reiterated its fiscal year guidance and there was an up-tick in organic revenue and net debt, analyst George O´Connor said in a research note sent to clients.

Furthermore, the company was confident on the outlook for fiscal year 2016, projecting an increase of at least 6% in organic revenue and operating margins of 27%, he said.

However, the company made no comment on the US, where there had been at least one high-profile departure.

Also on the negative side of the ledger, the outfit was focused on customer acquistion with more subscribers typically coming in at the lower end of the low value products range, as it focused on customer acquisition at the entry level, O´Connor explained.

It had begun a price war in that segment, which entailed the risk that customers would flip-flop between competing offers, O´Connor added.

Historically, the company had a poor record in terms of customer renewals as it pursued M&A and then "milked" the customer base of the companies it acquired, the analyst said.

Nevertheless, O´Connor stood by his target price on the shares of 594p.