AXO

A continued rise in Axon’s (AXO) share price suggests a counter-bid to trump last month’s 600p-a-share cash offer from Indian IT giant Infosys could be on the cards, according to Jonathan Imlah of Altium Securities. Imlah rated Axon a ‘buy’ on 20 August, since when the shares have risen 23.8%, making this the 36th best broker call of the past three months, according to Shares’ exclusive Honest Broker survey.

The Infosys approach valued the business transformation consultant Axon at £407 million, including a 2.3p interim dividend payment, equivalent to the 600p-a-share offer. Yet Axon’s shares have reached 615p, despite last week’s broader market swoon, which knocked 188 points (6.5%) off the FTSE All-Share.

Imlah’s July ‘buy’ on Pure Wafer (PUR:AIM) is ranked the best individual recommendation of the past three months by Shares’ survey of analyst ratings, after returning investors a 155% profit, and the analyst points out a number of Indian websites have been full of talk of an approach for Axon from HCL Technologies.

‘It remains our view that the 600p bid by Infosys does not reflect Axon’s true value,’ writes Imlah. ‘We have therefore increased our price target to 700p.... but believe that if a competitive situation transpires, 750p or above would not be above the realms of possibility. With a firm offer of 600p in cash as a back-stop, the downside risk is 3% at current levels and the upside risk could be 15% or more,’ he concludes.

by Russ Mould