Micro Focus share price underperforms as Barclays trims rating

on Apr 12, 2019

Shares in Micro Focus (LON:MCRO) have fallen marginally into the red in today’s session as Barclays lowered its rating on the software giant. Proactive Investors quoted the analysts as commenting that while they have been impressed by the group’s bounce back since its profit warning last year, they now reckon that the stock is fairly valued.

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As of 13:38 BST, Micro Focus’ share price had given up 0.26 percent to 1,938.50p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed marginally into positive territory and currently standing 0.20 percent higher at 7,432.94 points. The group’s shares have added more than 54 percent to their value over the past year, as compared with about a 2.5-percent gain in the Footsie.

Barclays trims stance on Micro Focus

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Barclays lowered its rating on Micro Focus from ‘overweight’ to ‘equal weight’ today, while lifting its valuation on the shares to 2,000p. Proactive Investors quoted the analysts as commenting that the software group had made ‘very significant progress’ since its profit warning last year, and that the business had stabilised.

“We are encouraged by the progress and anticipate ongoing positive momentum in earnings,” the broker pointed out, adding, however, that “while the stock still looks cheap on headline P/E, it has, in our view, reached fair value on an enterprise basis”.

Barclays concluded that despite lifting their valuation, they could not find sufficient upside for an ‘overweight’ rating.

Analysts on FTSE 100 software group

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JPMorgan Chase & Co reaffirmed Micro Focus as an ‘underweight’ earlier this week, without specifying a price target on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,723.63p.