Macquarie starts coverage on MYOB with $3.73 target
MYOB Chairman Justin Milne shakes hands with chief executive Tim Reed after the company listed on May 4. Daniel Munoz
by Sarah Thompson Anthony Macdonald Jake Mitchell
Macquarie has stepped out of the pack with a "neutral" call and $3.73 price target on recently listed accounting software provider MYOB.
The Australian broker became the first big equities house to initiate coverage on the stock on Tuesday morning, taking a close look at the business less than one month after it re-listed on the Australian Securities Exchange.
Macquarie told clients MYOB would gain a significant share of the cloud accounting software market in coming years as it capitalised on its strong relationships, desktop base and brand loyalty.
But the broker warned MYOB faced stiff competition.
ANZ technology and online comps support the valuation range.
"The competitive environment is aggressive and continued investment in R&D and marketing will be required," Macquarie analysts told clients.
"We believe MYOB is a high-quality, well-managed company that deserves to trade at a premium to the market. However, current valuation multiples largely reflect that premium in our view."
Macquarie valued MYOB's three business units at 12-to-16-imes earnings, on an enterprise value-to-EBITDA basis. The broker said MYOB's financial characteristics and outlook meant the company should trade at a premium to the wider market.
