Gofore - Upgrade to BUY

Gofore specified guidance for 2018 and gave an outlook on net sales for 2019, at EUR 50-52m (prev. 48-52m) and EUR 65-73m respectively. The long-term financial objectives remain unchanged. The demand outlook in broad has remained good. On our revised estimates we expect net sales of EUR 67.5m and EBITA of EUR 10.4m in 2019. On our estimates Gofore trades at a nearly 20 % discount to peers on ‘19E EV/EBIT, which we do not consider justified. We upgrade to BUY (HOLD) with a target price of EUR 9.8 (9.2).

Guidance for 2018 specified and 2019 forecast given

Gofore’s BoD specified guidance for 2018, expecting net sales to be EUR 50-52m (prev. 48-52m). An outlook for 2019 was also given, according to which net sales are expected to grow to EUR 65-73m, excluding any potential acquisitions in 2019. The long-term financial objectives remain unchanged, at 15-25 % net sales growth in the next few years and an EBITA margin of 15 %. The demand situation has in broad remained good and growth is expected across the board of customer areas.

2019E net sales EUR 67.5m and EBITA EUR 10.4m

We have revised our estimates, now expecting net sales of EUR 67.5m (prev. 62.9m), to include for the Solinor acquisition. Our revised EBITA estimate is EUR 10.4m (prev. 9.6m). Our 2019E net sales estimate is on the lower side of the 2019 outlook, leaving sales growth upside along with any potential acquisitions. The availability of skilled professionals remains a limiting factor and the lower range of the 2019 outlook would imply limited organic growth when accounting for the Solinor acquisition.

BUY (HOLD) with a target price of EUR 9.8 (9.2)

Valuation levels have seen declines following recent market uncertainty but, on our estimates, Gofore trades on a nearly 20 % discount to peer on ‘19E EV/EBIT. Having been among the strongest performers both in sales growth and profitability we do not see the discount as justifiable and upgrade to BUY (HOLD) with a target price of EUR 9.8 (9.2).

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