Broker snap: UBS cuts target for Micro Focus

23rd Aug 2011 10:51

Following Monday's announcement that signalled the end to bid talks at legacy software firm Micro Focus International, Swiss investment bank UBS has slashed its target price on the stock from 450p to 380p.After nearly four months of discussion, the firm announced that it had terminated discussions: UBS thinks that price-setting in the recent volatile trading and/or financing could have played a part in the decision.The broker's previous target price was calculated using an EV/NOPAT multiple of 12 (EV/NOPAT: enterprise value divided by net operating profit after tax). However, "we move to a 10x from 12x multiple until evidence of Micro Focus's ability to grow is re-established," said analysts Michael Briest and Chris Grundberg.Nevertheless, a buy rating was kept.Shares were trading 4.72% higher at 266p by 10.42 on Tuesday.BC