Growth Focus: Praemium Ltd (PPS)

by Patrick Taylor




Date of Data Capture: 23/8/2016

Name: PRAEMIUM LTD (PPS)

Classification: Investor Services

Current Price: $0.40

Market Capitalisation: $164M

Forecast EBITDA Growth: 70%

Gross Yield: 0%

Consensus Price Target: $0.57

# Covering Analysts: 4

Discount at Current Price: 42.5%

Price Target Trend: Increasing

Signal Time Frame: Quarterly/Daily

Trend Bias: Up/Flat Long/Medium

Indicators:
Short-term: Positive Neutral
Medium-term: Positive
Long-term: Positive

Recommendation: Buy

Set up Notes:
• Seems ready to take the next step up in this ongoing recovery from the lows of 2013 with very good forecast growth in a hot sector.
• Coming out of a medium-term consolidation in place since April 2015 which established the 40c resistance that is now being broken.
• Excellent long-term picture with some good shorter-term signals though we expect some volatility around this break of 40c.
• Main resistance targets are 60c, 80c and $1.20 with good support at 37.5c, 35c, 32.5c and down to 30c.


Growth Focus: Praemium Ltd

Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.

Quality often comes with a cost and when chasing growth prospects we are normally happy to pay a premium to make sure we get the best value stocks available. With Praemium Ltd (PPS) topping our growth shortlist this week we are more than happy to do exactly that and look to make the addition based on their incredibly strong fundamental and technical outlook which is well-supported by excellent ongoing performance coupled with exceptional potential.

Established in 2001 and based in Melbourne, Praemium is a financial services technology company involved in investment administration through various platforms covering client relationship management, separately managed accounts, financial planning and portfolio management. Services include WealthCraft CRM, V-Wrap portfolio, Administration, SMSF compliance & V-Wrap Form - and unless you work within the investment finance industry this is unlikely to get you excited… but with climbing sales, profits, margins and price, the rest of the story should easily grab your attention.

While we have witnessed some good success from within the fintech sector we can also see that PPS really hasn’t done much for the last 18months, capping an excellent rally from the lows of under 10c back in 2013, to reach a resistance-limited peak around 45c by early 2015. During the following consolidation the stock established a sideways range until just recently with most of the time since spent between 30 and 35c.

This started to break up a few weeks ago, with prices moving through that 35c resistance and then 40c before briefly touching the resistance target and current peak of 45c set 16 months ago. With only a hint of what we think is to come we saw prices barely touch the old high before staging a retreat back to test the breakout zone of 40c, which is where we find them now.

Looking to combine an exciting technical picture with excellent recent results and exceptional forecast growth it becomes easy to see why Praemium has been rising to the top of our filters for some while now. Their last set of results saw earnings lift up by 72% and importantly we see expectations that this incredible rate of growth is set to continue with next year’s consensus earnings forecast predicted to increase by around 70% again.

We also now see the price target for this stock increasing again after some sideways action for the last year and a half – and of the 4 analysts covering the stock all are either Buy or Strong Buy recommendations and we wholeheartedly agree and fully expect Praemium to live up to its almost-name and take on the dictionary definition of “Commanding a large price”...

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of RM Capital Pty Ltd (Licence no. 221938). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.