Source: Sharecast
Canaccord Genuity said Made Tech was a "nimble UK public sector DX market share gainer" that has organically grown sales ten times over the last six years, materially outperforming its end-market and most peers.
The Canadian bank stated that following some "growing pains" and a weak end-market in 2024, Made Tech has now "firmly found its footing again", with Thursday's FY25 trading update pointed to a sustained return to double-digit organic growth whilst beating consensus sales, profit and net cash expectations for the year, continuing the pattern of the last 12 months.
"Our estimates assume a likely conservative 9% FY25-27 sales compound annual growth rate, well ahead of UK IT/tech-services peers, with end-FY25 backlog growth of 52% providing good visibility here. Due to expected improvements in gross margins (fewer contractors, higher utilisation rates) and operating leverage, we forecast EBIT margins to improve from the current ~5% to ~7% by FY27, driving a sector-leading FY25-27E EPS CAGR of 22%," said Canaccord Genuity.
"Assuming Made Tech can continue to gain share of its +£3.0bn TAM and penetrate more high-spending government departments, such as Ministry of Defence, Department of Work and Pensions, His Majesty's Revenue and Customs and others, it could continue to grow at mid-teens percentage. On this trajectory, £100.0m in run-rate sales and £10.0m EBIT by 2030 would be a distinct possibility. On our estimates, this could drive the shares to 100.0p, more than three times current levels."
Reporting by Iain Gilbert at Sharecast.com