Broker snap: Merchant Securities surprised by AVEVA's results

28th May 2012 12:13

Merchant Securities reiterated its buy recommendation and 1,800p target price for AVEVA on Monday, saying that the engineering software group's full-year results were 'surprisingly strong' given its relatively conservative trading update last month.Revenues came in at £195.9m, 2.5% ahead of Merchant's £191.4m estimate. Basic earnings per share of 58.9p were 4.7% better than the 56.2p expected."Of particular interest is the H2 revenue growth run-rate, which was much stronger than expected at 16% yoy versus expectation of 10%. We will be re-checking the contribution of the Z+F business, which was expected to be marginal, but assuming this is true, this is a highly positive result," said analyst Roger Phillips.The broker also points out that net cash - up 17% to £179m - and operating cash-flow conversion looks very strong."Having been hit by macro concerns, the shares look good value here."Shares were trading 12.69% higher at 1,669p by 12:11.BC