- Broker raises price target to 1,550p as software group guides to revenue recovery in second half
Cerillion PLC (AIM:CER) shares climbed 5.3% in afternoon trading on Tuesday after Deutsche Bank upgraded the stock to 'buy', pointing to resilient first-half margins and a well-supported second-half revenue pipeline.
It also lifted its price target from 1,300p to 1,550p.
While the software firm expects first-half revenue to fall 7% year-on-year to £20.9 million due to the timing of licence sales, the German bank said this was already baked in.
More than £5 million of additional licence income landed in the same period last year, skewing comparisons.
Cerillion expects extension and renewal revenues to pick up materially in the second half.
Despite the top-line dip, adjusted EBITDA is expected to hold firm at around £10 million, with a 48% margin - well ahead of mid-term guidance of 40-45% and Deutsche’s full-year forecast of 44%.
Analysts attributed the strong profitability to improved service day rates and favourable foreign exchange on costs. Net cash rose to £31 million at period-end, reinforcing the company’s financial strength heading into the second half.