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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Berenberg reinitiates coverage of Kainos at 'buy', shares jump

(Sharecast News) - Software company Kainos jumped on Tuesday as Berenberg re-initiated coverage of the shares with a 'buy' rating and 1,315p price target, citing an attractive entry point. The bank said Kainos is a high-quality business that has demonstrated unusually strong revenue growth and consistently high cash returns on capital over an extended period.

"The company has developed a reputation for strong execution, driving high levels of customer satisfaction and best-in-class revenue retention," it said.

"The business is currently undergoing a cyclical slowdown in growth, and trades below its pre-Covid-19 average P/E multiple.

"In the context of a long runway for mid-teens revenue growth, margin accretion potential and, in our view, the likelihood that growth rates are close to troughing, a 4.6% free cash flow yield looks an attractive entry point."

At 1320 GMT, the shares were up 4% at 1,135p.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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