Challenger trading platform Aquis Exchange's (AIM:AQX) latest trading update highlighted ongoing challenges “but also the longer-term opportunities for the business”, said Panmure Liberum analyst Rae Maile.
Although the AIM-listed tech company recorded a record pipeline of new business contracts, this was offset by the non-renewal of a key client.
This has led to a “material” impact on near-term profit estimates, said Maile, though Aquis is likely not to blame for the non-renewal.
According to Maile: “Typically it is the case that a non-renewal is related to a failure of the technology or the failure of the client business, and in this case we have no reason to believe that the technology is at fault.”
He continued: “Although Aquis has lost one client, there is a record pipeline of other prospects according to today’s statement across a variety of international financial services clients and across different asset classes.
“The strength of the pipeline has led the company to a decision to accelerate strategic investment in the Technologies division over the next few years.”
This should have a limited impact on operating profit since Aquis’ costs are typically capitalised and amortised.
Although Panmure Liberum reduced current-year estimates to reflect the small client roster, the stock is still a buy with an 840p price target.
Shareds were swapping for 390p at the time of writing.