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Barclays tells investors in Micro Focus not to get carried away
Keep the faith! was the message from Barclays for investors in Micro Focus following the prior day's faith-shattering near halving in the company's share price.
The analysts conceded they had underestimated the "level of disruption" that the acquisition of HPE Software would throw up and - above all - the market's tolerance for mis-execution.
Fresh changes at the helm of the company were also unsettling, they admitted, but went on to add that to question the health of the company's balance sheet was simply going too far.
Hence, they reiterated their 'overweight' recommendation and 1,500p target price.
"Further management change is unsettling, but the debate has seemingly moved to the health of the balance sheet. This, for us, is a step too far and despite the challenges we believe MF remains a highly profitable and cash-generative business," they said.
Indeed, the company's leverage was headed below 3%, they believed.
"SUSE is a valuable asset, especially relevant at the current share price and, based on just 10x our low-end FY19E EPS, we see fundamental upside to our revised PT of £15 - OW."
Deutsche Bank on the other hand appeared to be rather less positive, slashing its target price for the shares from 2800p to 780p.
The analysts conceded they had underestimated the "level of disruption" that the acquisition of HPE Software would throw up and - above all - the market's tolerance for mis-execution.
Fresh changes at the helm of the company were also unsettling, they admitted, but went on to add that to question the health of the company's balance sheet was simply going too far.
Hence, they reiterated their 'overweight' recommendation and 1,500p target price.
"Further management change is unsettling, but the debate has seemingly moved to the health of the balance sheet. This, for us, is a step too far and despite the challenges we believe MF remains a highly profitable and cash-generative business," they said.
Indeed, the company's leverage was headed below 3%, they believed.
"SUSE is a valuable asset, especially relevant at the current share price and, based on just 10x our low-end FY19E EPS, we see fundamental upside to our revised PT of £15 - OW."
Deutsche Bank on the other hand appeared to be rather less positive, slashing its target price for the shares from 2800p to 780p.
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Micro Focus International (MCRO) share price |
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