Sage Group PLC's (LSE:SGE) full-year update offered some reassurance for investors questioning its growth and AI credentials, analysts at Citi said, but Deutsche Bank remained sceptical.
Annual recurring revenue growth re-accelerated in the fourth quarter to 4% quarter-on-quarter after a weaker Q3, aided by firmer market conditions and price increases, now running at 5.5%.
Monetisation of Sage Copilot -- the AI-powered assistant integrated into the group's accounting and financial software to automate tasks and provide real-time insights -- has begun, adding modest upside.
Citi says the performance ticked "all the right boxes", seeing the shares as having been under pressure from an "overhang from both fear of growth deceleration amidst uncertain macro and perceived competitive pressure, as well as the AI disruption-related concerns".
The modest acceleration in growth and stable full-year outlook were supportive of Citi's 'buy' rating and while analysts see AI as likely to remain a key topic of debate for the sector, "Sage’s efforts towards commercialisation should continue to build in 2026".
Deutsche Bank was less upbeat.
While analysts at the bank acknowledged Sage’s strong finish and buyback-supported upgrades to EPS forecasts, they see revenue growth still trailing global software peers.
"We note that organic underlying revenue growth has not accelerated, despite the improved pricing contribution."
Growth continues to slightly lag other global software peers and the valuation "now looks relatively full following the recent sector pullback", justifying Deutsche's 'hold' rating.
It said: "With slower growth than peers despite accelerating pricing and Copilot contribution, as well as margin expansion into FY26 seen at the lower end of the longer-term 50-100bps annual improvement range (although this is likely overly conservative guidance again), we struggle to see significant share price upside here."