Craneware PLC (LON: CRW)

Craneware PLC (LON: CRW) is an FTSE AIM 100 Index listed company, focused on the licensing and development of computer software for the healthcare industry.

Investment Rationale – SELL at GBX 1,740.00

• Profit Booking: CRW’s stock price has soared around 30% in the past month; and thus, investors can book profit as per their respective risk/return profile.
• Profit Decline: During H1 FY22, there was a 34% YoY decrease in adjusted basic EPS due to amortization of acquired intangible assets.
• Economic Slowdown: British economy contracted in April 2022, facing pressure from the rising fuel prices and household energy bills. It is reflecting the intensified cost-of-living crunch. Moreover, the interest rate worries, the US dollar hitting two-decade peaks, and subdued economic forecasts can continue to impact corporate profits and put pressure on equity markets.
• Technical Indicator: The momentum oscillator 14-day RSI (~66.62) is close to the overbought zone, while the price has breached the upper Bollinger Band. Thus, the price can face retracement from the current levels.  

One Year Share Price Chart

 (Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY23E) (Illustrative)

Conclusion

Based on the decent notional gains, macroeconomic instabilities, bearish technical indicators, coupled with the unfavorable valuation conducted above, we have given a "SELL" recommendation on Craneware PLC at the current market price of GBX 1,740.00 (as of 22 June 2022, at 2:18 PM GMT+1). 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

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