Canaccord Genuity raises target price on Cerillion

by | Feb 16, 2021

Analysts at Canaccord Genuity raised their target price on software firm Cerillion from 350.0p to 465.0p on Tuesday, stating that demand was “good” but also noting that execution was “key”.
Canaccord said Cerillion’s order book at the end of September 2020 provided it with visibility for over 90% of 2021 sales forecast, leading it to increase its 2021 sales and margin estimates by 2%.

As a result, Canaccord also made small changes to its 2021-2023 adjusted underlying earnings estimates for the group, translating to larger increases to adjusted earnings per share since it now forecasts Cerillion’s tax rate to remain lower than the 18% UK standard rate for longer than it initially expected.

“We upgrade our target price to 475.0p (from 350.0p) to reflect our view that the group deserves a circa 10-15% premium to the UK IT sector average,” said Canaccord.

The Canadian bank also highlighted that although the value of Cerillion’s recent 5G and Nokia partnerships was “difficult to quantify”, it believes the deals should provide a catalyst for orders.

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