Broker snap: Sage stock is expensive, says Investec

8th May 2013 13:39

British software company Sage posted a six per cent increase in first half pre-tax profit of 184m pounds which met market forecasts.The company, which provides software to more than 6.0m small businesses, reported a 3.0% rise in underlying revenue as more customers subscribed to its accountancy packages. Investec said Sage's investment in new Cloud products was key to competitive positioning but it also places a limit on margin expansion, especially as the top line continues to be affected by the weak microenvironment in Europe."Trading on 16 times fiscal year 2013 price earnings, with only modest growth, we see the stock as expensive," the broker said. "We will review our price earnings ratio-based target price, but expect to retain our 'sell' recommendation."RD