Canaccord raises target price on Kainos
Analysts at Canaccord Genuity hiked their target price on software firm Kainos from 1,515.0p to 1,765.0p on Wednesday, stating margin normalisation now looked set to begin.
Canaccord stated that since its full-year trading results in May, Kainos shares had rallied more than 35% on little news flow, with the market in its view pricing in upgrades to conservative consensus growth expectations.
The Canadian bank also stated that today's first-half trading update delivered on these expectations, with its full-year 2022 sales growth estimates being raised from 10% to 21% on the back of "significant recent UK government contract wins" and "continued strong momentum" in its Workday Services unit.
"Our new estimates imply broadly flat EPS yoy in FY22E as the company continues to deliver sector-leading organic growth while digesting normalising staff utilisation and other incremental costs," said Canaccord, which also reiterated its 'hold' rating on the stock.
"Following the recent rally, Kainos' >50x P/E sits at the high end of the shares' historic trading range and also well above UK peers."