Micro Focus rallies on Goldman upgrade
Micro Focus got a boost on Wednesday as Goldman Sachs upped the stock to 'buy' from 'neutral' and lifted the price target to 1,700p from 1,300p as it said the risk/reward is now skewed to the upside.
FTSE 100
8,078.86
17:14 25/04/24
FTSE 350
4,434.34
17:09 25/04/24
FTSE All-Share
4,387.94
16:49 25/04/24
Micro Focus International
532.00p
16:40 30/01/23
Software & Computer Services
2,390.57
17:09 25/04/24
GS said that following a period of significant M&A execution risks which led to turbulent sales growth in FY18, the dust is starting to settle at Micro Focus.
"We see early indications that the business is stabilising after an in-line trading update implying that revenue declines are not deteriorating any further which we view as a positive," the bank said.
In addition, it highlighted a number of positive indicators, among them the appointment of Jon Hunter, an industry veteran in the mature infrastructure space, to the executive management team. GS said he could be key in steadying the ship over the medium term.
The bank also noted the fact that management is incentivised to maximise shareholder returns, with management remuneration heavily geared to an increase in share price and total shareholder return.
"Having said this, recent management turnover (CEO & CFO leaving in 2018) might raise some concerns amongst investors," it added.
At 0940 GMT, the shares were up 5.4% to 1,377p.