Blue Prism is in a sweet spot with earnings growth

Software robotics group is racing ahead, although it remains a long way from making a profit
Thursday 20 Apr 2017 Author: Daniel Coatsworth

Analysts have upgraded earnings forecasts for software robotics specialist Blue Prism (PRSM:AIM) six times since it floated on the stock market just over a year ago. This pace of upgrades is extremely rare, in our opinion.

New orders are coming from both existing and new clients – and that’s exciting investors. The initial public offering (IPO) was priced at 78p in March 2016 and the shares now trade at 606p. That represents more than seven-fold share price appreciation.

Blue Prism’s software enables the automation of manual, rules-based administrative tasks.

Its system should help the customer to save money, but it isn’t simply about replacing humans with robots. Blue Prism says its software effectively frees up individuals to undertake more strategic and creative roles within a business.

Investec now forecasts £20m revenue in the year to 31 October 2017, which is more than double the £9.6m achieved in 2016.

‘To be relatively comfortable less than six months into a financial year that a rateable recognition business model is going to more than double revenues is exceptional,’ says Investec analyst Roger Phillips.

‘In our view, this reflects an attractive combination of a potentially massive total addressable market, combined with a supply bottleneck, with only three vendors capable of meeting the need – and Blue Prism the enterprise-grade vendor.’

It is worth noting that Blue Prism is not forecast to be profitable for the foreseeable future, despite the rapid sales growth. (DC)

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