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(Sharecast News) - Canaccord Genuity cut its price target on Cerillion from 2,060p to 1,760p on Monday, after the software group warned that secondhalf trading would be weaker than expected, leading to revenue and underlying earnings misses against consensus.
The Canadian bank said Cerillion had been set for a heavy secondhalf weighting, supported by the Omantel contract and anticipated upgrades from existing customers, but several expansions and licence deals had been delayed or deferred.
As a result, Canaccord Genuity said the expected rebound will be "more muted", with revenue and adjusted EBITDA now forecast to fall 11% to 14% short of market expectations. Canaccord noted that the Omantel implementation remained on track and that the newcustomer pipeline was still healthy.
Canaccord Genuity now expects FY26 revenue growth of 2%, with lower licence sales and margins driving a 13% decline in adjusted EBIT and earnings per share. It also forecast a return to growth in FY27 as slipped deals and new wins come through.
Despite the setback, Canaccord said its longterm view on Cerillion remained intact, describing the group as a structural marketshare gainer in the OSS/BSS software space. It argued that industry consolidation continued to create new opportunities for the company and that recent shareprice weakness offered a buying opportunity for longterm investors.
Canaccord cut FY26-28 revenue estimates by around 11%, with margins softening to 38% this year, and reduced EPS forecasts by 18%. It maintained expectations for 10% revenue growth and modest margin expansion in FY27-28, supported by a strong balance sheet with £36m net cash.
Reporting by Iain Gilbert at Sharecast.com
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