Fidessa Group PLC (LON:FDSA) was a top FTSE 250 gainer on Monday, with its shares gaining nearly 6% after the trading and investment information solutions provider delivered solid 2017 results.
For the year ended 31 December 2017, Fidessa said revenue grew by 6.6% to £353.9mln, up from £331.9mln in 2016, with the increase at constant currency 3%.
READ: Fidessa hikes dividend as annual profit and revenue rise
The firm said its recurring revenue rose by 8% to £312.3mln, up from £287.8mln in 2016, representing 88% of total revenue, up from 87% the previous year.
Fidessa’s full-year pre-tax profit increased by 2.3% to £50.0mln, up from £48.8mln in 2016, although it fell by 2.0% on a constant currency basis.
The group’s total operating expenses grew by 7.5% to £305.1mln which included one-off and duplicate costs from moving the company's Jersey City office in the US, as well as property lease provisions.
Without those items, Fidessa said it expects a small increase in its pre-tax profit margin for 2018, with falling costs offset by currency headwinds.
Boss expects similar levels of growth in 2018
Fidessa’s chief executive, Chris Aspinwall commented: “Overall, we expect to see similar levels of constant currency growth in 2018 to those seen during 2017.
“For 2019, the increased capacity is expected to result in a greater ability to invest in further opportunities as the markets develop, or if the right opportunities are not clear, deliver an increase in margin."
The firm increased its final dividend by 5.3% to 29.7p, up from 28.2p in 2018, with its special dividend unchanged at 50.0p.
Numis ups target price
In afternoon trading, Fidessa shares were 5.9% higher at 2,760p.
In a note to clients, analysts at Numis Securities raised their target price for Fidessa shares to 3.070p and reiterated an ‘add’ rating on the stock.
They said: “Fidessa's prelims are 5-10% ahead of our expectations (with beats on all major lines) led by margin outperformance, but the bigger story to us is the indication that margins may improve further from FY19.
“This arises from attenuation of the current high levels of MiFID II investment coupled with derivatives moving into profitability, with no equivalent new investment of similar scale.
The analysts added: “We think this could release up to c.200bp of margin (we include c.100bp in our forecasts) although there may be some reinvestment.”