Broker snap: Sage reassures

28th Jul 2009 12:43

Accountancy software giant Sage was the best performing FTSE stock on Tuesday morning though the rise appears to have been spurred by relief that the results were not worse than expectations."There has been no significant change in market conditions during the quarter ended 30 June 2009 and we are planning for markets to remain testing," said chief executive Paul Walker.Broker Evolution Securities was reassured by the trading update and has raised its rating from "sell" to "neutral" and upped its price target from 120p to 168p.Deutsche Bank, meanwhile, remains bullish on the stock, saying it "represents an attractive mix of defensive qualities coupled with some operational leverage in macro-recovery on the back of recent cost-saving actions". KBC Peel Hunt begs to differ. "Q3 has seen no change to the trend of downward pressure on licence income. Margins for now are being maintained through cost savings. We continue to see Sage as a late cycle stock and are wary of the risk that the current trend intensifies," said KBC analyst Simon Strong. KBC rates the shares as a "sell" and has a price target of 140p. It has left its full-year profit before tax forecast for this year unchanged at £226m.