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Thursday 06 Oct 2016 Author: Steven Frazer

IOMART (IOM:AIM) 285.75p

Gain to date: 10.5% 

Previous Shares view: Buy at 258.5p, 23 Jun 2016

Typically predictable and robust, a trading update on 30 September 2016 reaffirms the attractive investment case we made for IT outsourcing and cloud services supplier Iomart (IOM:AIM) back in June.


Management reports revenue and profit materially ahead of the comparative period last year, in line with expectations, and reiterates a confident outlook for the year to 31 March 2017, implying 13% revenue and 16% earnings growth, based on FinnCap forecasts. Market momentum continues to drive cloud services and Iomart has bases covered thanks to partnerships with big cloud vendors, including Amazon Web Services, Microsoft Azure and more.

An almost flawless record of execution delivering consistent high single-digit underlying growth bolstered by select and savvy acquisitions, not to mention 90%-odd recurring revenues, mean a price to earnings (PE) multiple in the high teens to low 20s looks totally justifiable. A March 2018 PE of 18 equates to a 342p share price, towards our 360p potential target and another 20% up from here. (SF)

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