Canaccord Genuity initiates coverage on Microlise at 'buy'
Analysts at Canaccord Genuity initiated coverage on transportation and logistics industry software provider at 'buy' on Thursday, stating the group was "ready to hit the accelerator".
Canaccord Genuity said Microlise was the market leader among large HGV fleets, with a roughly 58% market share, and counts the top 15 UK retailers as customers.
Microlise has grown revenues from £17.7m at the time of an MBO in FY08 to £81.0m in FY24, equating to a compound annual growth rate of 10%.
Canaccord noted that Microlise's software was mission-critical, and its modular software platform was exposed to "several structural tailwinds", including digital transformation, sustainability mandates, and an increase in compliance in the industry.
The Canadian bank also stated that Microlise has "a significant expansion opportunity" within its installed base, with a roughly £300.0m annual recurring revnenus opportunity if all customers took all modules.
"Microlise is a quality compounder with a strong installed customer base and minimal churn. Our customer interactions and testimonials received at Microlise's annual transport conference highlight the mission-critical nature of Microlise's software. We introduce new FY27E forecasts to the market, forecasting 7% yoy revenue growth and continued margin improvement," said Canaccord.
"We have used the wider UK SaaS peer group to compare Microlise's 'Rule of 40' credentials. Microlise would post a Rule of 20 performance in FY25, with a fair value of 2.4x EV/Sales on our forecasts. We use this as our target multiple to generate our target price of 199.0p."
Reporting by Iain Gilbert at Sharecast.com
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