Broker snap: KBC likes NCC acquisition

23rd Apr 2010 08:54

The bolt-on acquisition of SDLC, a provider of software and network testing, looks like a good fit for both the Assurance Testing and Software Escrow divisions of NCC Group in the view of KBC Peel Hunt.The broker has responded to the acquisition by provisionally upgrading its earnings forecast for the current year by 9% and next year by 10%. The target price is lifted to 540p from 489p."The strategic fit with the Assurance Testing business is relatively obvious, but also may help to ease some of the bottlenecks in that business in meeting demand. We also see good cross-selling opportunities for Escrow as part of the software assurance workflow, with further potential synergies with Verification work," suggests KBC analyst Alex Jarvis.