Aveva Group PLC surges 12% on results: is more share price growth ahead?

Does Aveva Group PLC (LON:AVV) (AVV.L) offer upside potential following today’s results?

Aveva Group plc
Aveva Group plc

Aveva Group PLC (LON:AVV) (AVV.L) shares have gained 12% today after the company released full year results. They showed a rise in pro forma revenue of 8.6%, with adjusted EBIT rising by 8.9% versus the prior year.

There was an encouraging performance from the heritage Aveva business, with its revenue rising by 15%. This was aided by foreign currency tailwinds, as well as a large contract.

There was also robust performance from the heritage Schneider Electric industrial software business. Its revenue increased by 5.4%, with adjusted EBIT rising by 0.7%.

The last year has been one of significant change for Aveva. The combination with the Schneider Electric industrial software business created a stronger entity in my view.

Now, the combined operation is seeking to become more efficient, with it announcing a target to deliver annualised cost synergies of £25 million. They are expected to be fully implemented by the end of the 202 financial year, with material revenue synergies anticipated over the medium term.

Looking ahead, Aveva remains upbeat about its growth potential according to today’s update. There remains an accelerating, secular trend towards the digitalisation of industry, and the company believes it is well-placed to capitalise on that over the coming years.

In my view, the stock could continue to perform well in the near term. Investor sentiment seems to have improved after today’s results, and this suggests that it may have positive momentum over the short run.

In the long term, the company seems to be well-placed to benefit from a tailwind in the industrial sector. Alongside its plans to generate synergies, this could lead to an improving growth outlook. Therefore, after a year in which its share price has risen by 40%, I believe there could be further upside ahead. As a result, I’m upbeat about its prospects from an investment perspective.

About Robert Stephens 3630 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page