Shares digital

Autonomy (AU.) – Finals PTP: $91.4m ($56.3m) Divi: n/a (n/a)

Yet another record set of annual results from the unstructured data management expert sent its shares on a two-day 11% romp to 953p, as chief executive Dr Mike Lynch flagged the sub-prime debt crisis could actually prove to be a good thing for his firm.

The financial services industry currently generates a relatively small portion of Autonomy’s sales, so the company looks fairly well insulated against any cut back in spending as banks try to repair their balance sheets after the sub-prime disaster.

Better still, a recent multi-year $70 million order from an unnamed global bank suggests demand for the Cambridge firm’s compliance archiving solution could go through the roof. Banks will increasingly have to ensure they have information ready to meet regulatory requirements and possibly lawsuits from disgruntled shareholders and sub-prime mortgage holders alike.

Last summer’s $375 million acquisition of ZANTAZ has also begun to nicely supplement strong organic growth in Autonomy’s own IDOL platform. A California-based global leader in content archiving and electronic discovery, ZANTAZ has a particularly strong position in the legal and financial services industries.

Dr Lynch’s outlook statement did acknowledge the risk of a downturn in the general economic environment. But it was equally clear in insisting no change in current trading patterns have been discerned.

Little wonder consensus analyst forecasts have pencilled in 50% to 60% EPS growth for 2008 and a further 15% to 20% for 2009, even after last year’s 48% surge. If the shares to are to continue their meteoric rise, however, Autonomy may well have to exceed, rather than just meet, these figures.

Shares says: Going great guns but a lot is now baked into a lofty valuation, on a prospective PE of 33.9.

by: Russ Mould