- Digital transformation specialist seeing best ever demand
- Analysts up forecasts for full year and 2024
- Stock trading on current year PE of 36
Belfast-based technology company Kainos (KNOS) upgraded its earnings forecast for next year on the back of ‘strong’ results across the board, saying demand ‘has never been higher.’
The digital transformation specialist announced a 16% rise in its half-year profits to £34 million on Monday, coming on the back of a 26% jump in revenue during the six months to 30 September 2022.
‘The strong revenue performance and backlog growth encourage us to raise our sales estimates by 5% with the implied 19% year-on-year growth in the second half well underpinned by backlog,’ said analysts at Canaccord Genuity.
Investec went further. ‘Half year results are strong across the board, prompting us to upgrade full year 2023 EBITA (earnings before interest, tax and amortisation) by 7% and 2024 estimates by 11%, driven by all business areas.’
Kainos is the leading partner in Europe for enterprise software giant Workday (WDAY:NASDAQ). This part of the business saw revenue grow 36% to £48.4 million, with an order backlog 136% up and bookings 125% higher.
Kainos shares rose 3.5% on Monday (14 Nov) to £14.87, although that’s still 18% down on the year to date.
FORECASTS RAISED
Investec is forecasting £371.6 million revenue (from £349.5 million) for the year to 31 March 2023, with EBITA of £66.8 million (£62.7 million) and earnings per share of 41.6p (39p). This implies a price to earnings multiple of about 36.
March 2024 estimates are now pitched at £412.4 million, with EBITA at £73.7 million and EPS of 44.7p.
‘Another strong set of results and upgrades support our positive stance on the stock,’ said Investec’s analysts in a note to clients. ‘We retain Buy and our £16.50 sum of the parts target price.’
