A strong first half result was broadly in-line with Morgans expectations, as was full year guidance for nearly $100m of profit (PBT). Strong double digit SaaS revenue growth has been muted by declining on-premise revenue.
Taking existing legacy customers (with an on-premise solution) and migrating their current offering to the company’s Cloud would grow annual recurring revenue by $180m to $414m, estimates the broker.
As recurring revenue grows, the analyst explains, the mix improves and the double-digit revenue growth will become clearer. The Add rating is maintained and the target price is increased to $10 from $9.99.
Sector: Software & Services.
Target price is $10.00.Current Price is $9.18. Difference: $0.82 – (brackets indicate current price is over target). If TNE meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
