AlsterResearch AG Update: Atoss Software AG - Transition hurts current margins

Atoss Software AG (Q2 results)

Technology

MCap EUR 1.44bn

SELL, PT EUR 150.00 (-17% potential)
Research update

What’s it all about?

ATOSS Software is in the middle of a transition from traditional licensing to a SaaSmodel. While hurting earnings and margins in early stages of the transition. With customers moving from software licenses to subscriptions, profits and cash flows can get lumpy as seen in Atoss’ Q2. The company took a hit of 530 bps on EBIT-margin. On the flip side, the company benefits in the long-term by increasing visibility and scalability. This perspective should be already factored in the share price, what makes the stock too expensive, in our opinion. In this context, our DCF-model does not support the high share price. We maintain our PT at EUR 150.00 and maintain our SELL.

 

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