TNE delivered a strong FY23 result this week, which initially propelled the stock towards its all-time high on solid headline numbers, e.g. revenue of $430mn was 3% better than expected, and UK growth at 51% YoY was a highlight. However, costs came in 6% higher than was forecast, which has been a common theme through 2023, this implied limited operating leverage moving forward and appeared to lead to a wave of profit taking with the stock falling ~8% from its post-result peak. We regard TNE as a high-quality growth stock, but we continue to believe it is expensive trading on 44x Est. FY24 earnings for the type of IT company it is.
- We were looking for TNE to test ~$18, but that’s now a big ask following this week’s report and general poor sentiment towards our local Tech Sector.
MM is now neutral toward TNE
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