Canaccord Genuity lowers target price on 1Spatial

(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on IT service management company 1Spatial from 105.0p to 95.0p on Monday following the group's recent preliminary earnings report. Canaccord Genuity noted that 1Spatial's interim earnings had confirmed revenue of £33.4m, up 3% year-on-year, with software & SaaS sales increasing 35% to £11.5m and recurring revenues growing to 62% of total revenue, up from 56% in FY24. Service revenues, on the other hand, declined by -9% due to procurement delays.

In terms of profit, Canaccord noted that inflationary cost pressures and increased amortisation charges from recent platform R&D resulted in adjusted underlying earnings of £1.4m, down 32% year-on-year.

Despite this, the Canadian bank stated that 1Spatial's outlook offered "cautious optimism", with FY26 starting well as the group secured its third significant contract for 1Streetworks worth £500,000 with Kent County Council and a had a number of proof of concepts ongoing.

"However, management remains cognisant of persisting macro uncertainties and subsequent procurement delays. As such, we update our FY26 forecasts, modeling yoy sales growth of 9%. Whilst this is undoubtedly a more subdued short-term outlook, we are encouraged by ARR growth (+14% to £19.7m), which indicates strength in demand for its software portfolio (evidenced in consistent renewals at 93%), and provides 54% coverage of our FY26E sales estimate," said Canaccord Genuity, which kept its 'buy' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com