Canaccord Genuity starts Idox at 'buy' on new initiatives and outlook for government spending

Analysts at Canaccord Genuity started coverage of software supplier Idox at a 'buy' with a 68.0p target price, highlighting the initiatives put in place by its new management team to turn the business around and the solid outlook for government spending.

The company three main business units were PSS, focused on the UK public sector, EIM which addressed the global engineering space and Content which was geared towards modules for grants, and for compliance training.

First half revenues were up by 10% with new management having refreshed the company's strategy, streamlined communications, modified commercial contracts and adopted more conservative accounting policies.

To take note of too, the company's first half of the financial year had included April, which saw a "good" result despite the onslaught from Covid-19.

And Cannacord understood that May and June had also traded well.

As well, 53% of group revenues were recurring and the order book for the remainder further supported the outlook for the full-year - which was unchanged from pre-Covid-19 expectations.

"Government spending pre-lockdown was due to increase after 10 years of austerity, and we expect it will only increase further post COVID."

We initiate overage with a BUY rating and 68p target price.