Sage Group: Updating our model - still a medium-term play

We reiterate our Neutral rating and increase our DCF-derived fair value to 540p from 520p on the rollover of our model to FY16 (+20p). While we consider there is no big challenge for achieving at least 6% lfl revenue growth and an operating margin of 28% for FY15, Sage constitutes a medium-term play as the ’Sage 2020’ transformation plan is expected to accelerate profitability improvement from FY18. Following a 16% YTD share price increase, the stock is fairly valued in our view.

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