Imagination Technologies boosted by Numis upgrade

7th Dec 2016 09:55

(ShareCast News) - Imagination Technologies Group gained as Numis raised its rating on the stock to 'buy' from 'add' and lifted the target price to 310p from 280p following better-than-expected results.The chip maker on Tuesday reported royalty revenues rose 6% and licensing revenues increased 7% in the first half. The group returned to profit with earnings before interest and tax up 65% to £12.2m as it slashed costs.Chief executive Andrew Heath said the restructuring programme, which was initiated last February, delivered £27.5m of cost savings.However, underlying royalties were down as expected, hurt by continued volume declines at Apple.Numis highlighted the company's outlook which stated the business is on course to deliver an underlying trading performance for fiscal year 2017 in line with expectations, supported by a strong US dollar.The broker upgraded its 2017 EBIT by 8% to £28m from £26m and earnings per share to 7.6p from 7.3p."We continue to value on SOTP (sum of parts analysis) which at current foreign exchange rates has moved to 310p per share from 280p and upgrade the target price accordingly."Shares rose 1.77% to 244.75p at 1016 GMT.