Sage should be resilient amid macro uncertainty, says Citi
Citi has reiterated a 'buy' rating for enterprise software giant Sage ahead of its interim results next week, saying that company's "drivers of resilience" were solid despite an uncertain macro environment.
Ahead of the results, Citi analyst Balajee Tirupati said the market's focus will be on customer demand and behaviour amid tough conditions, with many concerned about Sage's exposure to the small and medium-sized business (SMB) and non-profit markets in the US.
"Against this we expect a more stable business evolution with a broadly in line quarter (slight moderation in growth, better margins). Recent readthrough for SMB and back-office software space (US) appears steady, while other drivers in price increases and product expansion (regional & functionalities) remain intact," Tirupati said.
The analyst expects Sage's management to reiterate full-year guidance for growth and margins - though increased deal scrutiny by customers is possible if uncertainty persists.
"We see Sage as relatively insulated and maintain Buy on GARP appeal," Tirupati said.
Sage was trading broadly flat at 1,266p by 1102 GMT.
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