Berenberg restarts coverage on Aveva at 'buy'

18th Feb 2022 10:19

(Sharecast News) - Analysts at Berenberg restarted coverage on software firm Aveva with a 'buy' rating and 3,550.0p target price on Friday following its acquisition of OSIsoft.

Berenberg said Aveva's acquisition of OSIsoft would be "financially transformational" and contribute materially to its growth potential, stating it believes that its data-driven digital solutions will reach "mainstream adoption in the coming decade".

The German bank also highlighted that ESG-focused digitisation trends in Aveva's core endmarkets offer "robust growth opportunities", with software spending in the energy and power industries projected to "accelerate robustly".

"We believe that Aveva will be a high single-digit growth business over the medium term," said Berenberg. "However, in our view, the market does not give Aveva enough credit for the strength of the digitisation trends and the momentum in its end-markets. We think there is potential for Aveva to beat expectations from as early as FY23."

Berenberg values Aveva on a 2.7% one-year forward free cash flow yield, in line with design software peers.