July 23, 2009 10:31 pm

Misys sees US stimulus benefits

Misys, the banking and healthcare software group, said it had started seeing early benefits from the US administration’s $19bn financial stimulus package.

There was also initial evidence of its operational turnround after it said 30 per cent of its new revenues, about £15m ($25m), had come from new products.

Full-year results were in line with reduced market expectations and were boosted by the inclusion of US healthcare group Allscripts, the centrepiece of chief executive Mike Lawrie’s turnround plan. While Allscripts performed ahead of expectations, the financial crisis delayed orders at Misys’s treasury and capital markets business. Total order intake for 2009 was down 9 per cent on a like-for-like basis.

Misys is expected to benefit from President Barack Obama’s stimulus package for the US economy. “We’re seeing some early signs of demand and getting some early wins,” he said, pointing to a deal with Greater Hartford hospital in Connecticut for Misys’s open source software.

The software is part of a range of new services and product upgrades launched by Mr Lawrie after he took over in October 2006.

Revenue for the year to May 31 rose 41 per cent to £692m. Pre-tax profits rose from £48.9m to £94.2m while earnings per share fell from 23.3p to 15.8p. The shares closed up 4¼p at 180½p.

FT Comment

The story at Misys is evolving from reorganisation to performance. For the next 12 months, the banking-related businesses are likely to be subdued, albeit delivering single-digit growth. That leaves plenty for the healthcare and IT services divisions to do. Misys reiterated guidance through to 2010 of between 6-9 per cent growth for Allscripts-Misys and 10-12 per cent growth for Services, which are punchy targets. Analysts are forecasting that Misys will make earnings per share of 11.7p in 2010. That puts the shares on a prospective price-earnings ratio of 14 . Misys’ shares trade on a slight discount to those of rivals Autonomy and Fidessa, but a slight premium to the broader sector. That’s about right while further evidence of take-up for new products emerges.

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