Broker snap: Panmure raises Micro Focus target

8th Dec 2010 12:17

Panmure Gordon has increased its target price for Micro Focus International after interims matched guidance.The results provided no surprises, but the broker was impressed by cash collection figures and slightly increased the target price for shares in the business software maker to 467p from 460p.Analyst George O'Connor notes that cash generated from continuing operations stood at $77.9m at 31 October from $25.6m last year, bringing net debt down to $40.4m from $104.1m."Shares are very attractively priced," says O'Connor, as they trade on a price-to-earnings ratio of 10.2 and an enterprise value-to-sales ratio of 2.7."We like the Micro Focus business, the track record of cash generation, the wider opportunity as the legacy applications modernisation company, the 'selective acquisitions' strategy, the enviable customer base (18,000+ customers, 2m+ licensed users) and the delivery team," adds O'Connor.The broker retains its 'buy' recommendation.