TechnologyOne Limited (ASX: TNE)
TechnologyOne Limited provides a global software-as-a-service (SaaS) enterprise resource planning (ERP) solution that transforms the way organisations interact with their customers and communities.
Recommendation Rationale – SELL at AUD 15.995
- Profit Booking: TNE’s share price has breached the Resistance 1, suggested in the previous report on 18 August 2023.
- Financial Results: In H1 FY23, revenue and profit after tax surged 22% and 24%, respectively. Adjacently, total expenses and R&D expenditure also increased by 21% and 19% YoY, respectively.
- Emerging Risks: The equity market can remain volatile in the short-term following the Moody's warning of another US credit rating downgrade, rising US 10-year bond yield, upward pressure on rates, and Chinese property slump.
- Technical Indicator: The momentum oscillator 14-day RSI (~59.98) is approaching the overbought zone; and thus, price can face correction in the short-term.
- Overvalued Multiples: On a 12-month forward basis, key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are higher than the median of the Technology sector.
TNE’s Daily Chart
(Source: REFINITIV, Analysis by Kalkine Group)
Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)
Considering that the stock has surpassed its R1 level, current trading levels and risks associated, it is prudent to book profits at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 15.995 (as of 13 October 2023, at 10:35 AM AEDT).
Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 13 October 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Dividend Yield may vary as per the stock price movement.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services. Please note past performance is neither an indicator nor a guarantee of future performance.
Please also read our Terms & Conditions and Financial Services Guide for further information.
Employees and/or associates of Kalkine and its related entities may hold interests in the securities or other financial products covered in this report or on the Kalkine website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website including entities covered in this Report.