Broker snap: Sage needs acquisitions

26th Jan 2010 10:26

Accountancy software giant Sage traded in line with expectations during the last three months of 2009, but needs acquisitions to 're-ignite' earnings, says Piper Jaffray.The company sees no change in the trading environment in the first quarter of this year, driving an in-line performance thanks to its strong recurring revenue base and tight management of costs.Net debt at the end of the year was down to £392m from £439m at the end of September, as the company continued to generate cash. 'This level of debt leaves Sage comfortably within its banking covenants and is gradually paving the way for Sage to be able to again look at sizeable acquisitions,' said Piper, which keeps its 'neutral' rating and 229p target price.'These acquisition opportunities remain key, in our view, in order for Sage to re-ignite its earnings growth.'