Technology One Earnings: No Obvious Levers to Continue Historically High Growth Rates
We increase our fair value estimate for wide-moat Technology One by 2% to AUD 14.50 per share following its first-half result. The increase is due to the time value of money. At current prices, Technology One shares screen as significantly overvalued and implies a continuation of historically high revenue growth, which we consider unlikely. We attribute recent historically high growth rates to accelerated demand from governments and business in response to the covid-19 pandemic and high inflation feeding through in Technology One’s Consumer Price Index-linked contracts.