Though the company has kept its 2019 updates pretty light on detail, it hasn’t stopped the stock from having an excellent start to the year.
Opening at £23.82, AVEVA shares hit an all-time high of £34.49 in late April, before a pull back as May got underway. AVEVA shares now sit at a current trading price of £34.15, a very impressive 43% surge in just shy of 5 months.
On Valentine’s Day the company said that ‘trends seen in the first half’ have carried through the third quarter, with ‘low double-digit’ revenue growth across the first 9 months of the year (in H1 revenue was up 10.9% on a pro forma basis). Software sales grew faster than services, leading to a ‘modest improvement in gross margin’.
The fourth quarter statement 2 months later was more of the same, with a continuation of that aforementioned low double-digit revenue growth. Full year operating margins ‘improved’, though AVEVA was careful to highlight that additional costs were incurred due to a strong sales performance, and that it was investing to ensure it’s ‘optimally positioned to capture future growth opportunities’. The update ended with the reiteration that the integration of the heritage AVEVA and Schneider Electric industrial software business has continued to progress well.
Given that investors have been very receptive to these rather bland statements, more of the same on Wednesday might be enough to keep its gains going. For reference, last year it posted adjusted pre-tax profit on a pro forma basis of £162.8 million; a the half way point of this year adjusted pre-tax profit rose 54.3% to £60.5 million.
AVEVA shares have a consensus rating of ‘Hold’ alongside an average target price of £32.73.
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