Canaccord Genuity upgraded its view on shares of Blue Prism from ‘hold’ to ‘speculative buy’, telling clients the shares were undervalued, particularly taking into account the company’s prospects for fast sales growth.
According to the Canadian broker, trading on an enterprise value-to-sales multiple of 4.5, against the sector average of 5.5, the shares were “substantially” undervalued relative to its peers.
Furthermore, forecast sales growth was “materially above”.
Indeed, the firm’s customer base should allow it to grow its revenues at a double-digit compound annual rate of growth over the next few years, the Canadian broker said.
Yet the firm was not without its flaws, including its prioritisation of sales over profits, cash-consumptive operations and lower value-added software in comparison to other subsectors.
Looking out to the medium-term, there was also the potential risk lower-cost rivals entering the market, including Microsoft.
Its 1,250.0p target price for the shares was unchanged.
