Canaccord Genuity lowers Sage to 'hold' following recent rally

(Sharecast News) - Analysts at Canaccord Genuity downgraded Sage from 'buy' to 'hold' on Monday, but nudged their target price up from 1,135p to 1,230p, noting that the shares have rallied hard and now look fairly valued after a strong run through 2026.

Canaccord Genuity said its earlyyear upgrade to 'buy' had been driven by what it saw as an overdone "SaaSpocalypse" narrative and attractive valuation, with Sage still growing annual recurring revenues at around 10%. However, it said the stock's more than 45% rally has now taken valuation back to more normal levels.

The Canadian bank argued that while nearterm AI risk appears less threatening than markets once feared, longerterm disruption remains a "known unknown" that were likely to cap any rerating. On CY27 metrics, Sage's 13.5x enterprise value/underlyig earnings, 18x price-to-earnings and 20x enterprise value/free cash flow ratios look reasonable for a lowteens earnigns per share grower, but not compelling enough to justify a continued outperformance, prompting the move to 'hold'.

Canaccord also sees few catalysts ahead and expects FY26 results on 19 November and FY27 guidance to be broadly in line with consensus, with no major upside surprises. A fresh buyback also looks unlikely given leverage was set to finish FY26 at the top end of Sage's 1-2x net debt/EBITDA range.

The broker remains close to consensus on revenue and slightly ahead on adjusted EBIT, though a touch below the roughly 50p adjusted EPS forecast. It said FY27 expectations of 9.4% organic revenue growth and 60 basis point margin expansion appear sensible but not conservative enough to drive a rerating.

Reporting by Iain Gilbert at Sharecast.com