Sage Share Discussion Threads

[maddox] 22/11/2024 18:07

Thought I’d have a look at the Brokers’ Analysts’ recommendations on Sage:

Strong Buy........4
Buy...............5
Neutral...........8
Sell..............1
Strong Sell.......2
.................20
Source: Sharecast.com

I note that Canaccord have responded to the sparkling results with a reiterated Sell Recommendation but have increased their share price target to 1090p up from 970p, and 615p previously (Jul24). The Brokers’ consensus target of 1248p is 3% below today’s close of 1289p. The Brokers, with only a couple of exceptions Jefferies, Citi, have been sceptical of SGE throughout its period of transition so it’ll be interesting to see whether this continues, or we see some break ranks and upgrade to Buys.

[maddox] 21/11/2024 23:15

Well, well, well that was a nice surprize - I wasn't expecting such a positive market reaction to Sage's excellent FY24 Results. The shares rose 19% closing at 1269.5p.

Mr Market was clearly warming to SGE but then cooled on cautious remarks in the 1H24 Analyst Briefing. Nothing to take exception to in these results:

>> Underlying revenue +9% statutory +7%
>> Underlying Operating Profit +21% statutory +43% revealing the operational gearing.
>> Underlying basic eps 37.9p +23% statutory 32.1p +55%
>> EBITDA margin widened +1.6 ppts to 26.6%
>> Underlying Cash conversion 123%
>> Dividend lifted 6% y-o-y
>> Free cashflow increased 30% to £524m
>> Share buy-back up to £400m

As the SaaS transformation is largely complete the Underlying and Statutory figures are aligning. It looks like the flywheel effect has firmly kicked following the previous investment in marketing now generating profitable growth and cash. The buy-back programme suggests that they have more than sufficient cash for investment in marketing and up to a £400m surplus. The buy-back also suggests that they're thankfully not looking for a large acquisition.

[wad collector] 20/11/2024 20:47

Impressive performance, especially in an AIM bashing market.

[martinmc123] 20/11/2024 11:31

4*
Sage Group posted another strong set of FY numbers this morning confirming more strong and efficient growth. Underlying total revenue increased by 9% to £2,332m, reflecting the strength of the Group’s subscription-based recurring revenue model. Underlying operating profit grew by 21% to £529m, driving a particularly strong margin increase of 220 basis points to 22.7%, with disciplined cost management supporting ongoing investment. EBITDA was up by 16% to £622m while statutory operating profit increased by 43% to £452m...from WealthOracle

wealthoracle.co.uk/detailed-result-full/SGE/995

[jaka] 12/11/2024 02:35

44% of underlying revenue USA and Canada.

29% of underlying revenue UK, Ireland and Africa.

27% of underlying revenue France, Iberia, and Central Europe

(Underlying revenue is typically reported in a company's income statement, which shows the revenue and expenses related to just its core business activities.)

[robinnicolson] 11/11/2024 18:54

Intuit are also up sharply since Trump won the presidential race.

[1968jon] 11/11/2024 12:22

So what was all that about?? Massively underperforms the FTSE on the way and then seven trading days later, with the FTSE broadly where it was on 31st of October, Sage rallies from mid £9.60s to mid £10.60s. On no news, that's madness and I can't attribute the rise to Trump. Talking my own book, I did sell some puts down there.

[1968jon] 01/8/2024 15:40

I wonder who the Capital Group bought their 5% from. Holdings RNS at 4.30pm today

[maddox] 31/7/2024 08:25

SGE share price has recovered after the 6% dip yesterday, it fell to 997p before recovering and closing at 1071 (-1/4%).

As expected the journalists had to attribute an explanation: 'Shares in Sage fell sharply on Tuesday after the enterprise software group reported a slight slowdown in top-line growth in its third quarter.' Josh White, Sharecast.

However, we already had that information at 1H24 and there was clearly no further deterioration in sales growth - as the guidance was maintained, and as I posted above, there was plenty of positive indicators.

So why the fall? We'll never know - but the simplest explanation is we had some profit taking and a lack of buyers to take the shares. If someone watching with Level 2 would like to give a view?

[SGE is back to 1086p as I post]

[maddox] 30/7/2024 08:44

In-line trading update for 3Q24 and guidance reaffirmed – so the immediate 6% share price fall is odd. Perhaps a p/e of 27 is considered to high for the UK market – this ain’t the US where similar firms are on considerably higher valuations. Nevertheless, there is nothing negative in this update that I can see to justify Mr Markets reaction.

Total Rev Growth of 9%, within this, Sage Cloud Native products grew at 23% - this is currently about 30% of total revenue. So, the underlying picture is positive with strong growth drivers – “We now have Best-in-Class products in all our regions”. The star Sage Intacct is performing very strongly in the UK and now launched in France and Germany. [Intacct has been the key growth driver in the US.] The low levels of digital adoption in Europe present SGE with a great opportunity. Looking forward, as Cloud Native becomes a larger proportion of total revenue, we should see the growth rate accelerate.

Margins are set to widen, Sage have pushed up prices 5% but churn is “low and stable” and seeing no material change in the competitive environment.

IMHO investment case is intacct ;-)

[maddox] 29/5/2024 12:02

Hi jon,

Shares that are trading on a high p/e are subject to what I call 'Expectation Risk' - if the firm fails to meet the Brokers' expectations the share price will fall. This is what happened with Sage - the results themselves were excellent.

Anyone not closely following Sage will see the share price reaction and think something really calamitous has occurred. Journalists then oblige - finding spurious explanations for the fall. The IC dug up an old Panmure Gordon report from February that talked about tough competition. All complete bs.

There was nothing in these figures or the Trading Update Q&A to suggest that Sage is losing out to competitors - just that US prospects are taking longer to commit as they are being slightly more cautious.

Therefore IMHO Sage's value and prospects are the same - but just cheaper to buy.

[1968jon] 29/5/2024 09:40

I was going to post something on the morning of the results but it turned into a rant so I stopped. The gist of it was "are the public markets in the UK worth the aggravation?". On most metrics the numbers met expectations but the stock opened down 20%. I know it recovered a little but still. I have been wrong on many stocks before and plenty of Sage analysts think I'm wrong on this one but a FTSE 100 company should not move 20% unless it is a clear profit warning. If, and I of course recognise that it is an if, Sage continues to grow revs and profits at these levels with improving margins, it will be twice the size in 5 years. If a large PE software firm had bought this in the last four years , and for the life of me I can't believe it didn't happen, it would be on their books at North of £16.

[maddox] 28/5/2024 22:58

The last results were pretty excellent, here are the highlights:

>> Underlying total revenue increased by 10% to £1,152m
>> Underlying operating profit increased by 18% to £254m
>> Margin increasing by 160 basis points to 22.0%
>> EBITDA increased by 14% to £299m
>> Statutory operating profit increased by 38% to £215m
>> Underlying basic EPS increased by 23% to 18.2p.
>> Strong underlying cash conversion of 127%
>> Robust balance sheet, £1.1bn of cash and liquidity, net debt 1.4x EBITDA
>> Interim dividend up 6% to 6.95p, in line with our progressive policy.

And yet we're 17.5% down on our recent 26 March 52 wk High. Unfortunately expectations were looking for an acceleration in growth and SGE fell just short. Whilst still top-lining its geographies North America has moderated somewhat - whilst other geographies aren't quite ready to pick up the slack. So, overall growth didn't accelerate and so the pundits weighed in with negative comments about 'competitive threats increasing' 'well-funded competitors' etc.

IMHO this is a bump in the road - growth is starting to come through in other geographies - a bit early to move the dial yet but looks promising. Whilst the growth has moderated for the moment the margins will continue to improve - thus profitability and cash generation - so all told we're on course.

And who knew - Sage has now emerged as the UK's AI powerhouse. This is clearly not PR fluff as Sage has fully developed products live and early adopter clients on-board. So, coming from behind our nag appears to now broken through and out in front of its competitors.

[halfpenny] 16/5/2024 13:24

Fill ya boots great value and future strong. CEO on Ian King and positive results.

Market Growing fast with AI solutions in High Demand in the SME market.

Future brighter every day with CEO positive about Future.

[amt] 16/5/2024 08:29

So perhaps EPS of 39p and next year 47p
So pe of 25 to 30 looks fine for a safe growth stock.

[maddox] 21/4/2024 14:18

The fool article is a marketing exercise, a few paragraphs of general description, no useful insights - certainly before having to sign-up - I didn't bother. One glaring error - it seems to say the yield is nearly 10% - unfortunately it's more like 1.7%. This might be poor editing and referring to another mystery share that we need to subscribe to discover the name of - but it's far from clear.

This to me probably reflects the quality of Motley Fool's analysis. Why did they pick Sage - that's easy it's gone up 45% in a year - question is were they tipping it a year ago? I'll venture a no.

[maddox] 25/3/2024 17:59

Most of the Brokers have been well off the pace with Sage, even when they moved to a buy rating the share price target has significantly lagged Mr Market - even in a risk-off market environment. So, the current consensus spt is 1168p - c.8% below today's close. I think Mr Market is backing SGE to achieve its ambition to be a 'Rule of 40' SaaS firm and justify a premium rating.

Whilst arguably SGE is looking expensive on a fwd p/e of 33 - but not excessively so if you see Intuit is on a p/e 65 or Xero on 1,250(Morning Star figs)!

[1968jon] 25/3/2024 09:39

You've got to love an analyst! Having interacted with them, I understand that the job is more than having perfect ratings in real-time for every stock and that buy/sell/hold etc are not for instant trade instructions, but optically they look daft. They also don't get fired on the basis of poor ratings.

I don't know what was written in Socgen's note - maybe it included a huge mea culpa, but I doubt it - but for the uninitiated they might ask what has happened to the stock that you told me not to go near and that you now tell me not to buy, other than the share price rising?
I presume Barclays are still sellers per my post above.
Truly, they all hate Sage.

[bigbigdave] 25/3/2024 08:12

*SOCGEN RAISES SAGE GROUP TO 'HOLD' (SELL) - PRICE TARGET 1303 (922) PENCE

[1968jon] 22/1/2024 10:34

You see, I thought they were perfectly decent numbers, but the market clearly needs better than decent to justify a further rise. It is sometime since I have had access to IB research but I see that Barclays have run the numbers again and today go underweight and lower their price target to £9.85. Does anyone have a summary of their thesis?

[maddox] 18/1/2024 09:26

Q1 Trading Update - strong start to the FY24 and full year guidance is reaffirmed. Strong ARR growth continuing the performance exiting last year (11%) and margin increase expected of 0.8%.

SGE's SME market is proving resilient in the light of the macro-economic back-drop. This is borne out by the revenue growth in key drivers:

'Sage Business Cloud revenue increased by 18% to £454m, driven by growth in cloud native revenue of 25% to £174m (Q1 23: £140m) primarily through new customer acquisition, and by growth in cloud connected revenue from both existing and new customers.'

As the Sage Business Cloud Native products become more dominant in the product mix we should see the overall revenue (at 10% for 1Q24) trend towards the higher growth rate (25% for Cloud Native in 1Q24).

[maddox] 06/12/2023 10:12

Very impressed by the share price resilience. The shares jumped up 14% on the results and has powered on further rather than dropping back. Clearly the share buy-backs will be supportive but I suspect the steady rise from March took out any weak holders - so buying activity is not finding ready sellers.

We've seen some more Broker upgrades, Bank of America share price target 1300p, Citi 1300p, JPM 1250p, but Canaccord amend to Sell and 970p spt.

Overall, SGE at 1145p as I post is above the 1124p Brokers Consensus and 53% up so far in the calendar year. I wonder where we'll be if SGE become fashionable?

Well done all holders.

[1968jon] 23/11/2023 12:54

I am not saying the share price should be higher and I know some houses now have a target materially above spot and I have a very low opinion of analysts generally, but as evidence that this stock is still nowhere near fashionable, I give you Barclays and Deutsche raising their targets to £10.50 and £11 post-numbers yesterday.

[1968jon] 22/11/2023 12:48

Clearly a bonkers but welcome move this morning. I have little faith in analysts' assessments of this stock but at least JPM, who were ahead of the curve, have raised their target to £12.50 today. Shore cap (I know, I know, slightly different calibre of firm than JPM) will be pleased they went from buy to hold on Friday.