{"id":4118,"date":"2024-01-08T19:00:53","date_gmt":"2024-01-08T19:00:53","guid":{"rendered":"https:\/\/economicherald.net\/?p=4118"},"modified":"2024-01-08T19:00:53","modified_gmt":"2024-01-08T19:00:53","slug":"moneytalks-broker-says-dropsuite-is-a-buy-and-ipg-group-to-rise-from-renewable-energy-transition","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=4118","title":{"rendered":"MoneyTalks: Broker says Dropsuite is a Buy, and IPG Group to rise from renewable energy transition"},"content":{"rendered":"<p>Ord Minnett rates software stock Dropsuite a Buy as we transition to renewable energy<br \/>\nTaylor Collison slaps Outperform rating on electrical components provider, IPD Group <\/p>\n<p>\u00a0<\/p>\n<h2>Dropsuite is undervalued, says broker<\/h2>\n<p>Broker<strong> Ord Minnett<\/strong> says software company <strong><a href=\"https:\/\/stockhead.com.au\/company\/dropsuite-dse\/\">Dropsuite (ASX:DSE)<\/a><\/strong> is an undervalued, profitable growth story after initiating a <strong>BUY rating<\/strong> on the stock with a <strong>price target of 33c<\/strong> (vs current price of 30c).<\/p>\n<p>Founded in Singapore in 2011, the $200m market-capped Dropsuite is a cloud-based software platform offering backup, archiving, and recovery solutions for businesses.<\/p>\n<p>The company specialises in protecting critical data from <em>Microsoft 365, Google Workspace, QuickBooks<\/em>, and others. Its products are distributed via a network of around 4,000 IT reseller partners globally.<\/p>\n<p>Ord Minnett believes DSE operates at the intersection of three mega-trends, being:<\/p>\n<p>(1) the rise of cybercrime,<\/p>\n<p>(2) the migration of on-premise hosting to the cloud,<\/p>\n<p>and (3) MSP (Managed Service Provider) industry growth.<\/p>\n<p>\u201cThese themes have long runways and will continue to act as positive tailwinds,\u201d said the broker.<\/p>\n<p>Over the past seven years, Dropsuite has delivered extraordinary growth, with a CAGR of &gt;70%, and has managed to do so profitably \u2013 delivering positive free cash flow in each of the past six quarters.<\/p>\n<p>\u201cAdditionally, DSE\u2019s management are prudent capital allocators, having built a ~$150m business on just ~$43m of outside capital (of which only ~$18m has been spent). We expect this performance to continue,\u201d said Ord Minnett.<\/p>\n<p>At the<em> Inspire Conference 2023 <\/em>in August<em>,<\/em> Microsoft provided a first look at its <em>365 Backup and Archive solution. <\/em>DSE\u2019s price fell 22% on the day and has not recovered since.<\/p>\n<p>\u201cHowever, based on our work and discussions with industry participants, we conclude that fears of any existential risk to DSE\u2019s business are overblown. Accordingly, we believe the market\u2019s scepticism is providing an opportunity,\u201d wrote Ord Minnett.<\/p>\n<p>This is because DSE\u2019s <strong>Microsoft 365 (M365) Backup product<\/strong> is considered a product leader, as evidenced by its consistent outperformance vs peers on both a qualitative (industry awards), and quantitative (market share) basis.<\/p>\n<p>In 2023, DSE ranked number 1 of its peer group for product features, satisfaction, experience and capability \u2013 for a fourth consecutive year.<\/p>\n<p>\u201cFurther, our discussions with industry participants also highlight DSE as a product leader in the space,\u201d said Ord Minnett.<\/p>\n<p>\u00a0<\/p>\n<h2>IPD Group to benefit from renewable energy transition<\/h2>\n<p><strong>Taylor Collison<\/strong> has slapped an <strong>Outperform rating<\/strong> on <strong><a href=\"https:\/\/stockhead.com.au\/company\/ipd-group-ipg\/\">IPD Group (ASX:IPG)<\/a><\/strong>, with a <strong>12-month price target of $4.80<\/strong> (versus current share price of $4.69).<\/p>\n<p>The $485m market-capped IPG is a distributor of electrical infrastructure products to <strong>major construction and renewables projects nationwide.<\/strong><\/p>\n<p>IPG tracks its origins back to the 1950s and listed on the ASX in December 2021, raising $40m at $1.20 per share.<\/p>\n<p>The company has seen growth especially since 2019 due to acquisitions and from expanding distribution relationships with equipment manufacturers. More recently IPG has been investing in expanding its capabilities and growing a national team of consultative salespeople.<\/p>\n<p>Taylor Collison believes the electrical industry is booming, and that there\u2019s a strong argument we are still in early innings amidst a major infrastructure project upswing, as well as a transition toward renewable energy systems.<\/p>\n<p>\u201cIPD offers a \u2018picks and shovel\u2019 exposure to the booming electrical sector without taking on individual project or contract risks common to contractors and other listed players,\u201d wrote Taylor Collison.<\/p>\n<p>\u201cBut there are more strings to IPG\u2019s bow than simply riding project cycles. Since listing, they\u2019ve expanded supplier and customer bases, entered new product categories, and have materially increased market share.\u201d<\/p>\n<p>Taylor also believes IPG\u2019s management has an ambition to grow its share to multiples of the current level, and they are pursuing this with urgency.<\/p>\n<p>\u201cTheir capital allocation record is excellent, and there\u2019s a long runway to deploy capital to match the market leader\u2019s offering. Shareholder alignment is high with management owning around 20% of the shares on issue.\u201d<\/p>\n<p>According to Taylor, IPD can grow rapidly through acquisitions.<\/p>\n<p>\u201cPast acquisitions have not only delivered growth and operating leverage, but also enhanced IPD\u2019s capabilities and contributed to development of key supplier partnerships. We think this model is repeatable, and recent M&amp;A looks set to replicate this model.<\/p>\n<p>\u201cIPD\u2019s balance sheet is modestly geared, and capex requirements are minimal beyond funding working capital.<\/p>\n<p>\u201cA policy of retaining 50 per cent of earnings and access to capital markets will provide ammunition for future M&amp;A,\u201d noted Taylor Collison.<\/p>\n<p>\u00a0<\/p>\n<h2>Share prices today:<\/h2>\n<p>\u00a0<\/p>\n\n<p><span class=\"mce_SELRES_start\">\ufeff<\/span><span class=\"mce_SELRES_start\"><\/span>\u00a0<br \/>\n<span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/experts\/moneytalks-broker-says-dropsuite-is-a-buy-and-ipg-group-to-rise-from-renewable-energy-transition\/\">MoneyTalks: Broker says Dropsuite is a Buy, and IPG Group to rise from renewable energy transition<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Ord Minnett rates software stock Dropsuite a Buy as we transition to renewable energy Taylor Collison slaps Outperform rating on electrical components provider, IPD Group <a href=\"https:\/\/economicherald.net\/?p=4118\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":4119,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4118","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - 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