Sage: Strong Growth in Sage Business Cloud Continues; Shares Slightly Overvalued

Narrow-moat Sage Group reported results in its third-quarter trading update that were broadly in line with our expectations. Total revenue in the third quarter was up 10% versus last year, while recurring revenue increased 11% despite a tough comparator, driven by continued growth across the Sage Business Cloud portfolio. 2023 guidance was maintained. Shares were up around 1% intraday. We don’t expect to make a material change to our forecast or GBX 810 fair value estimate. At current levels, the shares look slightly overvalued.