AVEVA shares undervalued after strong results, says Numis

27th May 2014 10:38

Numis Securities has reiterated its 'buy' recommendation for AVEVA after the software group's well-received annual results on Tuesday, saying the shares are significantly undervalued. "AVEVA is a top quality business and we are comfortable that it is right to use any pull-backs as an opportunity to build positions," Numis said in a research report.The Cambridge-based supplier of engineering data and design IT systems, said pre-tax profit rose 9% to £69.0m for the year ended March 31st 2014. Adjusted pre-tax profit climbed 11% to £78.3m, ahead of the £75.9m expected by Numis.Revenue at the group, whose software is used to design power plants, shipping and energy facilities, rose 8% to a record £237.3m, more or less in line with the broker's £236.9m estimate.Numis said that an outperformance on the cost level helped profits beat forecasts, though currency headwinds are a concern going forward. "We think the most notable element of these results is that AVEVA is outperforming its largest competitor (which we think grew 6-7% in the six months to March 14 versus AVEVA's 11%) and also holding its growth rate in a market widely expected to be more challenging," the broker said."In particular, the breadth of AVEVA's geographic and customer relationships looks to insulate it from work shifting between different providers."Numis kept a 2,840p target price on the stock, which was trading 11.8% higher at 2,416p by 10:48 on Tuesday.BC