Australia | Jul 17 2006
By Terry Hughes
It seems analysts at Intersuisse would struggle to recommend Oakton (OKN) more highly after their latest report on the stock.
Organic growth has prepared the company for acquisitions, the analysts say, and the first of these, Clickstream, is seen as looking good.
The deal is expected to be EPS positive and to add over $6m in revenue to FY07 numbers, Intersuisse estimates. In addition, all the principals from Clickstream are to remain in their positions to help facilitate a smooth integration.
The acquisition is "significant" the analysts say, as it comfirms their belief that the company has now established itself as "a magnet for IT professionals wishing to work on the A team," while also bulking up the company’s core activity which should please its major clients.
The company is a "proven top performer" at the top end of a high growth industry. It offers a franked yield of nearly 5%, which is expected to rise to 6% and growth is forecast to reduce the company’s PE ratio from 15x FY07 earnings to 12x in FY08, the analysts say.
Intersuisse expects more acquisitions in FY07, with the company forecast to move further into the Canberra and Brisbane markets while also strengthening its current capabilities.
No surprise then that the analysts rate the stock a Buy. Of the four other brokers and equity advisers covering the stock, three also rate the stock positively and one is neutral. The average target on the stock is $3.63 and the stock closed on Friday at $3.25.