Wealth management software provider Bravura Solutions’ (ASX: BVS) shares have seen an impressive month with growth of 29.6%. However, most notable is the stock’s drastic increase in the last two trading days, experiencing a growth of 21.6% at the time of writing.
Bravura Solutions share price experiences impressive growth after updated guidance (Source: Jason Briscoe)
This stark increase comes after Goldman Sachs upgraded the company to a buy rating from neutral.
It is understood that Goldman Sachs’ upgrade was made in light of the updated guidance on Tuesday from Bravura Solutions’ annual general meeting, revealing that the company is on track to achieve its FY 2020 guidance of mid-teen net profit growth. The update also presented that due to the recent acquisitions such as FinoComp and Midwinter which will enhance structural growth in Australia and the UK, another $3 million in net profit is projected.
Bravura Solutions’ core open source Sonata product appears to be a phenomenon in the projections of the company’s growth. The next generation wealth management administration system will enable users to connect and engage with clients anytime, anywhere, using their choice of device; for example, desktop / laptop, tablet or smartphone.
Goldman Sachs is optimistic towards the company’s new Sonata product, noting the efficiency of the function funded by new clients, which can then be rolled out to other clients,
We see Sonata’s track record with an established client base and continued product development as key selling points.
When determining whether to invest or not, it is important to consider that the share has already reached $5.01, which is almost at Goldman’s target share price of $5.06. This implies that the upside potential for the stock in the short term is relatively limited and for a contrarian investor this may be a missed opportunity.
However, for those who prefer to invest with the flow of momentum and for the long run, it may be sensible to put the stock on a watch list. Given the optimism shown by Goldman Sachs for the company’s strong long-term growth potential, with new products such as Sonata entering the market, Bravura Solutions stocks could be a great buy and hold option.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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