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Sage share price heads south even as group delivers rise in FY revenue

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Shares in The Sage Group (LON:SGE) have fallen deep into the red in London this morning, even as the company delivered a rise in full-year revenues, as investors focused on the group’s outlook. The update comes after the company, which helps businesses manage things such as money and people, recently appointed its finance chief and interim chief operating officer as its new chief executive.

As of 10:24 GMT, Sage’s share price had given up 4.03 percent to 514.60p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.62 percent higher at 6,990.94 points. The group’s shares have given up just under 34 percent of their value over the past year, as compared with about a 5.6-percent dip in the Footsie.

Sage posts full-year results

The Sage Group announced in a statement today that its organic revenue had climbed 6.8 percent to £1.82 billion in the 12 months ended September 30, while organic operating profit had come in at £505 million, compared with £475 million in the prior-year period.

“Sage has shown stronger performance in the second half of FY18. The renewed focus on high-quality subscription and recurring revenue has generated momentum as we exited the year,” the group’s new chief executive Steve Hare commented in the statement.  

The company, however, cautioned that its  organic revenue growth rate may decrease in the short-term as the group shifts to subscription. Sage further plans to invest around £60 million as it looks to accelerate its transition to a software-as-a-service (SaaS) model.

Analysts on blue-chip group

The 16 analysts offering 12-month price targets for The Sage Group for the Financial Times have a median target of 675.00p on the shares, with a high estimate of 900.00p and a low estimate of 495.00p. As of November 17, the consensus forecast amongst 19 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.  

As of 10:39 GMT, Wednesday, 21 November, The Sage Group plc share price is 514.20p.

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