Added 4 months ago
#Risks

Cash receipts declined for March Quarter 2019 

March 19 $9,524,000

Dec 18 $9,786,000

Sep 18 $10,273,000

High short term costs at the expence of profitability

Managment focussing on revenue growth

Investment into sales & marketing, product development and general & administrative functions

Recent aquisitions of HROnboard and BoxSuite (31/1/19) 

Moelis $6.37 price target (April 2019)

Short to medium term sideway SP action likely

Continued decline in cash reciepts could see significant SP drop

Alternatively - investment improves sustainable growth targets longer term SP should move up. 

 
Added 2 months ago
#Broker/Analyst Views

26 July 2019:  The following link will take you to a broker report from Moelis Australia on Elmo Software (ELO) that they released today, titled, "Strong Finish To FY19":

http://research.moelis.com.au/ResearchPortal/DownLoad?E=bfbikccbe

They've just increased their TP for ELO from $6.37 to $7.54, being about 3% above the $7.32 level that ELO closed at this afternoon (Friday 26 July 2019).

Moelis say that their Target Price increase primarily reflects an expansion in peer multiples. However, they have reduced their rating to HOLD following the recent share price appreciation.

They like the ELMO story and believe there is a strong opportunity for the company to capitalise on its positioning as a comprehensive, cloud-based HR & Payroll software platform in the mid-market to win new customers and upsell its expanded modular suite into its customer base.  However, they believe the current valuation is challenging at 8.4x EV/FY20 Sales and have moved to a neutral rating accordingly. 

 

Disclosure:  I don't hold ELO shares.
 

 

 
Added 7 months ago
#Bull Case
stale

In the latest 3C ELO delivered positive net cash flow

Well capitalised with ~$39M in cash

Although slightly down from the previous qtr cash receipts remained strong with a 75% increase

Further aquisitions, although present intergration risk, add further customers and diversity

Current pull backin the share price presents an opportunity in my opinion.