IDOX Plc (IDOX)
ISR viewIDOX is a well run and ambitious company but, in our view, this has yet to be fully appreciated by the City. After a tough 12 months, IDOX has emerged largely unscathed from the uncertainties around public sector spending cuts and the strategy really seems to be gaining momentum once again.
Confident despite weaker results
IDOX Plc | Download | Published on 12/01/2010Supplier of software and services to the local authority market IDOX has issued full year results this morning which were trailed by a recent profit warning. Having dipped on the November warning, IDOX shares have recovered slightly since but remain stuck in the 10p-12p trading range. The shares now trade on a substantial (50%) discount to the sector.
However, whilst there is little doubt that IDOX shares are significantly undervalued, the key to outperformance in the short term will be restoring confidence in estimates. Assuming that there are no further trading disappointments, we believe that the shares will continue to move back towards the top of their recent trading range and perhaps as high as 14p on a 12 month view. Any outperformance above that will depend on a more meaningful catalyst such as a strategic acquisition.