No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Analysts at Berenberg lifted their price target for Kainos to 1,330p from 1,185p after the group's unscheduled trading update on 18 August prompted sizeable upgrades to both revenue and profit expectations for FY27.
Berenberg said Kainos had maintained the strong momentum seen in FY26, when revenues grew 17% yearonyear, with performance in the opening months of FY27 described as "very strong".
Growth was broadbased across the group, though digital services remained the standout, supported by major contract wins in late FY26 and early FY27. Both Workday divisions were also said to be trading well, delivering doubledigit revenue growth.
Berenberg raised its FY27 revenue forecast by 5% and FY28 by 3%, and raised adjusted pre-tax profit estimates by 4% and 2%, respectively. It now expects FY27 revenue to rise 25% yearonyear to £540.4m, around 6% above prior consensus, with adjusted pre-tax profits also up 25% to £84m - roughly 8% ahead of earlier expectations.
The German bank, which has a 'buy' rating on the stock, highlighted that Kainos' confident outlook was underpinned by a robust pipeline, a sizeable multiyear contracted backlog and supportive structural trends.
On Berenberg's updated forecasts, Kainos trades on a 16.3x FY27 enterprise value-to-underlying earnings ratio and a 22.4x FY27 price-to-earnings ratio (excash), with the bank expecting a 13% earnings per share compound annual growth rate between FY27 and FY29.
Canaccord Genuity slightly lowered its price target on Ultimate Products from 80p to 75p on Wednesday, after moderating its FY27 assumptions in light of subdued earlyyear trading and limited visibility.
Canaccord said Ultimate Products' FY26 update confirmed results would land in line with expectations, with revenue down 3.5% to £144.9m and adjusted underlying earnings falling around 20% to £10m.
The Canadian bank stated that while consumer demand across general merchandise remained soft, UP's strategic pivot toward higherquality branded revenues continued to gain traction, with proprietary brands growing 5.3% to £128.4m and now accounting for almost 90% of sales, while lowerquality clearance activity was cut back sharply.
H2 revenue was broadly flat yearonyear, signalling improving momentum despite the tough backdrop, while licensed brand sales fell 23.6%, and clearance/whitelabel revenues dropped 60%, as expected. EBITDA margins contracted to 6.9%, reflecting mix effects and slightly lower gross margins, though operating costs were tightly controlled, and net bank debt reduced to £8.6m.
With new CEO Simon Harrison joining in October, Canaccord said it was prudent to assume UP's FY27 performance would broadly mirror FY26, cutting its adjusted underlying earnings forecast to £10m from £11.4m.
Canaccord reiterated its 'buy' rating on the stock, but lowered its target price to 75p, arguing UP remains wellpositioned for future growth once macro conditions improve.
Reporting by Iain Gilbert at Sharecast.com