Broker snap: NCC to keep on rising

12th Jan 2011 11:38

Financial advisory firm Collins Stewart expects shares in IT security assurance specialist NCC Group to keep on rising, and rates the company a 'buy' with a target price of 700p. "The exceptional profitability, consistent cash generation and circa 90% recurring revenue of the software escrow division, together with the industry-leading expertise, strong demand and scarcity of supply in the assurance business, constitute a highly attractive combination which justifies a premium valuation in our view," said analyst Jonathan Imlah."The recent Wikileaks scandal provided a timely reminder of the vulnerability of corporations and governments alike to cybercriminals and so-called 'hacktivists,'" said Imlah. He adds that NCC is ideally positioned to capitalise on this "escalating cyber war." Despite shares being around 50% higher than at the same time last year, the broker says that the group's valuation "fails to reflect the strategic worth of the assurance business," expecting further upside in the share price.The interims on 20 January are expected to confirm the trading momentum, and with the results usually weighted at a 40:60 ratio in favour of the second half, the broker expects the acquisition of US-based security testing business iSEC Partners in October to further pronounce this bias.