Proactive Investors - Run By Investors For Investors

Barclays warns of ‘likely’ second-half slowdown for Sage

The analysts have noted that the comparatives get more difficult as the year progresses, and that any slowdown could disappoint the market
sage
Barclays has upped its price target, but it is still well below where the shares currently sit

Analysts at Barclays have warned that a second-half slowdown for Sage Group PLC (LON:SGE) “seems likely”.

Sage, which makes accounting software for businesses, has seen its share price climb by almost a fifth this year after topping expectations with its first-quarter growth.

READ: Sage reiterates guidance after strong start to the year

But Barclays’ number crunchers have warned that the first half benefits from easier comparatives, while things are expected to get a little tougher in the second half of the year.

“We think Q1 should not be viewed as an especially material data point in assessing the growth rate of the business over the coming couple of years,” read a note to clients.

“It is likely that the [cloud] transition will gather speed over the course of the year – a good thing – but that this will result in revenue growth moderating. This could be further exacerbated by tougher comps in the second half of the year.”

The analysts added: “We think an H2 slowdown is likely and that this could disappoint the market.

“We therefore remain ‘underweight’, albeit on an increased price target of 550p (from 495p), now based on 17x CY20E EPS (from 15x) to reflect increased market multiples.”

Sage shares were 0.1% higher at 702.8p on Friday morning – comfortably ahead of Barclays’ target.

View full SGE profile View Profile

Sage Group Timeline

Related Articles

scientist in laboratory
March 07 2019
In a January update, Instem said trading had been in-line with expectations, helped by a 500% rise in orders for its SEND platform
mobile payment
June 22 2018
MySQUAR wants to beef up the mobile payments side of its operations in anticipation of a surge in demand for those services in a country where only 20% of the adult population have a bank account
lock
October 18 2018
Managed services revenue jumped 52% in the first half of 2018 with the order book standing at £2.4mln.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use