FY18 operating earnings were 11% ahead of Morgan Stanley’s estimates. The company has guided to around 50% underlying sales growth in FY19. Morgan Stanley was most surprised by the significant reinvestment in personnel across the support, product and integration network, and supports the investment.
The broker notes the company is acquisitive and has flagged more than $30m to acquire functionality and customers. Overweight rating, In-Line industry view and target raised to $8.00 from $6.30.
Sector: Software & Services.
Target price is $8.00.Current Price is $6.85. Difference: $1.15 – (brackets indicate current price is over target). If ELO meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).