Sage Share Discussion Threads

[lyntwyn] 04/2/2007 11:30

02.02.07 :-5, (272) downgraded to 'neutral' from 'buy' at Merrill Lynch on valuation grounds, with the broker lifting its target price to 295 pence from 270 pence, dealers said. In a note this morning, Merrill Lynch said the stock has moved above its 270 pence target price, and noted it no longer sees a compelling valuation argument because the PE multiple has appreciated towards the upper end of the stock's historical valuation range. The broker sees no short-term catalyst, although it said it continues to believe in the stock's investment case and expects to see an acceleration in the group's organic growth rate in the coming years.

[maddox] 25/1/2007 09:53

Lyntwyn,

Agreed. Not only that but that 9% premium is very useful if Sage decides to take one of them over. The acquisitions profit contribution will be then valued at that premium rate - making the aquisition immediately value enhancing. Its that bit of financial alchemy I like!

On the otherhand, a Private Capital Fund has no synergy benefits to add value apart from possibly offering cheaper debt financing.

Regards, Maddox

[lyntwyn] 25/1/2007 09:42

Maddox, ING reckon that SGE trades at a 9% premium to its european peers, hence its caution on current share price I would have thought that to be justified bearing in mind Sage's track record.

[maddox] 24/1/2007 16:31

Lyntwyn,

ING seem to think that Sage have peaked for the moment. Maybe, but I see no evidence for the comment about threats from private equity funds. Sage have not had to compete with a Private Equity Fund for any of their recent acquisitions. Their Swedish target had some other investors that created a 'special purpose vehicle' to counter Sage's bid. To their credit Sage walked away rather than overpay.

However, Private Equity Funds are not themselves targeting the firms that Sage might have in its cross-hairs. Their comment is nonsense.

Regards, Maddox

[lyntwyn] 24/1/2007 15:01

This seems rather nonsensical to me- on both counts!!

"ING told investors to take profits in Sage Group (LSE: SGE.L - news) as it downgraded the shares to "sell" from "hold" citing valuation grounds.

The broker noted that growing competition and threats from private equity funds could well derail Sage's acquisitive strategy"

[maddox] 15/1/2007 10:13

Thanks for that Lyntwyn,

The organic growth rate at 7% is very healthy. When you take into account that that will include (I assume) the recent acquisitions then on the period-to-period fin results comparison the performance should look even better.

Regards, Maddox

[maddox] 15/1/2007 10:13

Thanks for that Lyntwyn,

The organic growth rate at 7% is very healthy. When you take into account that that will include (I assume) the recent acquisitions then on the period-to-period fin results comparison the performance should look even better.

Regards, Maddox

[lyntwyn] 13/1/2007 10:43

12.01.07 :-2.5, (275) software stocks suffered across to Europe following a profit warning from Germany's SAP AG, with Credit Suisse also reporting back from a recent meeting with the UK firm's management, dealers said. In Frankfurt, shares in SAP shed over 8% in value today after the software giant warned that it would not meet its 2006 software license sales goals because of a slowdown in the key US and Asia markets in the fourth quarter. Meanwhile, in comment published this morning, Credit Suisse noted that one of its key take-aways from its recent meeting with Sage was that the UK firm's current year organic growth rate will be at the same level as 2006 at around 7%. The broker pointed out, however, that acquisitions should offer further room for upside, as Sage has capacity for external expansions, and its pipeline is also strong. Credit Suisse said it believes upgrades to its own and consensus estimates for Sage Group are possible. The broker added that if Sage can deliver organic growth of 7% in 2007, EPS should edge closer to 15 pence and the stock should also re-rate to reflect underlying improvement. Credit Suisse concluded that, in this scenario, Sage shares could touch 300 pence levels. The broker repeated its 'outperform' rating and 280 pence target price on Sage.

[lyntwyn] 05/1/2007 09:50

Sage lost 5½p at 265½p as UBS argued that the shares look fully valued. Sage's willingness to make bolt-on acquisitions could help momentum in the stock, analysts claimed, but with future growth largely priced in, they reduced their rating from "buy" to "neutral".(Today's Times)

[lyntwyn] 11/12/2006 16:17

ING ups SGE target to 259 pence from 246 -afx

[nil pd] 05/12/2006 17:21

Thanks Lyntwyn.

[lyntwyn] 05/12/2006 16:50

DIVIDEND AMOUNT 2.51p
TOTAL 3.59p
PERIOD H2 Dividend
PROVISIONAL EX DATE 07-02-2007
PAYMENT DATE 09-03-2007

[nil pd] 05/12/2006 10:09

Is XD date 9 Feb? (If so, it gives plenty of time for value investors to jump on board).

[nil pd] 30/11/2006 12:28

Thanks guys. Looks like the re-rating is gathering pace. Should be a good end to the week tomorrow.

[lyntwyn] 30/11/2006 10:23

Nil Pd, I'm not aware of any previous bid and I don't anticipate one but a few analysts have often referred to MSFT as a possible predator. Msft has been trying to get into SGE's market but I can't see its customers switching to MSFT. So the thinking in some quarters is that if MSFT can't beat it perhaps it will buy it!

[w.bramley] 30/11/2006 10:19

NilPd

If you click on CHARTS (top of page) and on DATE RANGE set it to say 1/6/1999 you will see the massive rise it made to over 900p. It must have been a bid that failed, but at the time some one must have bought at that level.

[nil pd] 30/11/2006 10:03

Lyntwyn, this is brilliant share price performance on the back of scintillating figures. I have set a personal target of 275 - 300 within a week or two.

You mentioned "I'd imagine a bid right now would fetch up to 400p. Any other thoughts on this?"

Is a bid really on the cards? w.bramley refers to "another" bid, so what past action have I missed?

EDIT: Nice to see Fidelity buying almost 5%.

[lyntwyn] 30/11/2006 08:59

"If there are flaws, they are not all dollar-related. Revenue growth in Germany is 2 per cent, hurt by a fragmented and regionally divided market where it badly needs scale. But with Sage throwing off cash, packing £650 million of firepower and having proved an unwillingness to overpay, investors should be confident that such gaps in its portfolio will be addressed. At 259p, the shares have further to go"
full article @


*JP Morgan has an overweight and 300p target for Sage
Citibank has buy for Sage

[lyntwyn] 29/11/2006 16:10

Yes but that was ridiculously inflated as per tech bubble! Ironically SGE is not really a tech stock despite being continually referred to as "the only tech stock in the FTSE100" village! Majority of tech stocks that survived are still struggling to get to 10% of their peak(eg ARM,SPT,LOG).
I'd imagine a bid right now would fetch up to 400p. Any other thoughts on this?

*Swiss broker UBS maintained 'buy' advice as the numbers topped its forecasts.

[w.bramley] 29/11/2006 15:57

Nice rise today, but if you subscribe to ShareScope and trace back, you will be surprised to see that the share price did get to 912p (repeat 912p) on the 14th March 2000.
Usually rises of this sort come from a take over bid or rumour of one, however it did spark this massive rise, followed by a sharp fall. Assuming that the company has grown since then, so where would the price of the stock be now if there was another bid?

[a77] 29/11/2006 14:57

Goes to show what these analysts really know.
Next stop £3.

[maddox] 29/11/2006 12:13

Guys,

These results are really excellent, Sage are picking up the pace, and a positive future outlook too. The 25% increase in the total dividend payout is going to be very supportive of a re-rating - strong growth, strong eps growth and rising dividends. An income and growth share - pretty compelling.

Regards, Maddox

[maddox] 29/11/2006 11:59

pjohnson,

There will always be a market for freeware for companies that want to do without the product support. But MSFT will be seeing this as an opportunity to get the customers small. Is the price of a properly supported accounting package prohibative to small businesses?

Regards, Maddox

[pjohnson] 29/11/2006 11:46

MSFT have a free version of their accounting package for US users.If that comes to the UK as a free package, it will do fine for small companies. At the moment though it is for US companies only and up to 25 employees.

[nil pd] 29/11/2006 11:18

Excellent. I knew SG had got it so very badly wrong.