Objective Corporation shares hit all-time high following profit guidance
Published 13-JAN-2017 15:32 P.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Shares in IT services group, Objective Corporation (ASX: OCL) surged 22.5 cents on Friday morning, representing a gain of 13%. This was in response to the release of management’s profit guidance for the first half of fiscal 2017 which featured year-on-year net profit growth of circa 150%.
It should be noted that historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
Chief Executive, Tony Walls commented, “The first half of the financial year has seen a very positive performance by the company and the outlook for the second half continues to look favourable”.
The company has traditionally been conservative with its guidance, suggesting that management’s reference to a ‘favourable’ second half result could be downplaying what may translate into a very robust full-year result.
With regard to Objective’s operations, there are similarities with IPH which experienced a strong share price run on the previous day. Both companies provide IT services that are more non-discretionary in nature given they relate to security of information and proprietary assets, as well as providing financial benefits that evolve from improved efficiencies.
This generally translates into better stability of revenues, as well as resilience at times when industry conditions are challenging.
Looking across the group’s revenue segments, the main income generator, ECM Solutions grew revenues by 25%. Interestingly, Gregg Taylor from Blue Ocean Equities flagged a good performance from this area of the company’s business when he ran the ruler across the stock in the second half of 2016.
More specifically Taylor noted that Objective is currently launching its revolutionary next generation core software ECM 10 into Microsoft Office 365, a product suite he believes has enormous potential.
At that stage he said the ECM 10 product release along with significant recent contract wins was expected to deliver strong earnings growth starting in fiscal 2017, with substantial upside to be realised from the company’s new business lines, Objective Connect and Objective Keystone.
At that stage his price target was $2.50 with a strategic target of $3.20 in the event that anticipated upside from initiatives in train were realised.
Consequently, today’s rally could be the start of a more substantial run, and it is worth noting that this morning’s high of $2.10 is equal to the company’s all-time high, and a push past this level could attract the interest of technical analysts.
General Information Only
This material has been prepared by Jason Price. Jason Price is an authorised representative (AR 000296877) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573) (62C), and a Director of S3 Consortium Pty Ltd (trading as StocksDigital).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, Jason Price, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, Jason Price, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.