Broker snap: NCC to maintain organic growth

21st Jan 2010 12:28

IT security firm NCC delivered results that were ahead of expectations and the 17% hike in the interim dividend is a sign of the board's confidence for the remainder of the year, according to Altium Securities.The broker likes NCC's combination of 'high recurring revenues, organic growth and strong cash generation' and rates the shares a 'buy', with a 450p target price.'Should we see an improvement in customer sentiment, as anticipated, this should also help, although against that the poor weather over the past few weeks will undoubtedly have had some temporary impact on utilisation rates in Assurance Testing,' the broker said. KBC Peel Hunt is also a buyer, though it was less surprised than Altium by the results, which it described as 'in line'.'NCC Group is capable of maintaining strong organic growth with the potential to outperform our revenue and margin forecasts over the next two years,' KBC analyst Alex Jarvis said. 'Key upside factors may include the reintroduction of price rises when appropriate, increased verification sales, increased cross-selling and the achievement of the 20% margin target in the Assurance Testing division,' Jarvis added.The broker has upped its price target to 489p from 435p.