afr.com: Local fund managers say MYOB float is ‘pretty fully priced’

A major investor in small cap stocks, who declined to be named, said they would not buy MYOB shares because they are “pretty fully priced”.

Another fund manager described MYOB as a “high quality business with good recurring revenue” and pointed to IG Markets “grey market” in MYOB, which is pricing the float at about $3.75. However the investor said MYOB was not worth that much and they would wait to see if they could buy in future at a lower price.

Morningstar previously indicated its assessment of fair value for the stock was $3.50 and said investors should not buy above $3.85.

The risks for MYOB have changed since it was last a listed company six years ago. Dual-listed competitor Xero now has 10 per cent of the Australian small business accounting software market, however MYOB remains the market leader.

A number of fund managers said MYOB had a good opportunity to convince 716,000 customers who use its software to free to move to its lower cost subscription-based cloud product when they next need to update the program. MYOB has 116,000 customers using its cloud software, compared to Xero’s 203,000 in Australia. MYOB has about 505,000 paying customers across both its cloud and desktop users.

via Local fund managers say MYOB float is ‘pretty fully priced’ | afr.com.

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