Analysts at Canaccord Genuity raised their target price on software firm Aptitude Software from 785.0p to 845.0p on Monday, stating it had added “more ooMPPh to the SaaS” with its acquisition of privately-held UK-based outfit MPP Global.
Canaccord, which also reiterated its ‘buy’ rating on the stock, said Aptitude’s £38.7m acquisition of MPP Global, a subscription revenue and billing management software-as-a-service platform targeting the media vertical, equalled roughly 10% of its market cap and would be fully funded from the company’s balance sheet.
Reflecting further product and organisational integration investments in 2022, Aptitude expects the unit to be break-even in 2023 and show positive earnings accretion in 2024.
Given the “competitive enterprise software M&A environment”, the Canadian bank views the 3.8x last twelve months enterprise value/sales ratio and a 4.6x EV/annual recurring revenue acquisition multiple as “very attractive” for mid-to-high-teens SaaS growth.
“On our new estimates the shares trade on 4.9x 2022E EV/Sales, an in our view unwarranted ~20% peer discount given accelerating growth, double-digit margins and a strong b/s. Our new 845.0p target is based on a blend of two valuations – 6x EV/Sales and the NPV of our 2025E bull case scenario (12% sales CAGR, 25% op. margins),” said the analysts.
