Broker snap: Singer takes cleaver to Aveva

1st Oct 2010 13:23

It is time to take profits on engineering software firm Aveva, reckons Singer Capital Markets, after the strong performance by the shares over the last three months."Aveva is a well managed business that is strongly positioned to deliver good returns in a broad based recovery and has a loyal shareholder base. However, we believe estimate momentum will play a crucial role in sustaining the re-rating the company has seen recently. Given planned investments in Aveva Net and the modest pace of recovery in its markets, we believe it is difficult for the company to beat what appear to be some aggressive market expectations near-term," states Singer analyst Tintin Stormont.Using Singer's projected earnings for the year to March 2011 the shares are trading on a price/earnings ratio (excluding cash) of 24, suggesting that the "shares have run too far ahead". Singer is now a seller, having previously considered the shares fair value, though it has pumped up its target price to 1250p from 1060p.