Credit Suisse, Citi lift targets for Sage but disagree on outlook

4th Dec 2014 09:41

Sage's shares were extending gains on Thursday after the accountancy software group impressed the market with its annual results, with the stock given a boost by target price upgrades at both Citigroup and Credit Suisse.The stock was up 5.6% at 445.7p by 10:40, having risen nearly 11% in just two sessions following its full-year figures on Wednesday morning.Citi raised its target for the shares from 450p to 475p and kept a 'buy' rating, saying that Sage's in-line results "reflect[ed] continued recurring revenue momentum that in turn was underpinned by accelerating subscription dynamics"."More importantly, we believe that the new management delivered a confident and pragmatic message at the analyst meeting. With the results overall directionally supportive of our investment thesis, we retain our 'buy'," the US bank said.Meanwhile, Credit Suisse lifted its target for the shares from 355p to 385p, but kept an 'underperform' rating, saying that the company has to invest more to stay competitive.While results were in line with its forecasts, the Swiss bank said Sage's outlook "is not risk-free"."While headlines look satisfactory we continue to be surprised by some of the details," Credit Suisse said.'Specifically, beneath the numbers, there is no customer growth. While price increases and cross selling are short-term drivers, we continue to believe that sustainable revenue growth will need customer growth. Elsewhere, we still believe the Sage One progress lags competitors."