18th Mar 2024 18:52
(Alliance News) - Bytes Technology Group PLC slumped after it announced it has launched an investigation into former chief executive Neil Murphy's share dealings, though Panmure Gordon's believes the share price fall offers a buying opportunity.
"Bytes plays very well to the long-term growth dynamics of software and is a clear beneficiary of AI and Cyber software growth dynamics. While Bytes remains on a premium rating to its peers, on the back of the pull back in the shares, we now have a decent level of upside to our target price of 650 pence," Panmure Gordon analysts said.
They lifted their recommendation for the stock to 'buy' from 'hold' on Monday. Shares fell 7.5% to 524.50p each in London on Monday.
Bytes launched a probe into former CEO Murphy's share dealings after revealing he had failed to disclose a huge number of trades in company shares.
Back in February, Murphy resigned after disclosing to the BTG board a number of undisclosed trades in company shares.
On Monday, BTG explained the resignation followed a voluntary request for information from the UK Financial Conduct Authority, sent to Murphy on February 14. The RFI indicated that Murphy may have conducted additional transactions that were not disclosed to the market or the FCA.
Murphy was due to present his initial response at a board meeting on February 21, but instead resigned on that date.
In February, BTG said Murphy had engaged in 119 undisclosed transactions on 66 trading days between January 6, 2021, and November 10, 2023.
Subsequently, BTG said Murphy's lawyers have disclosed a further 15 transactions conducted on Murphy's behalf by his wife, between December 2021 and November 2023.
BTG said it was "saddened as well as shocked by Murphy's actions, which it finds hard to comprehend".
BTG said an independent committee was investigating the resignation of Murphy and his undisclosed share transactions. PricewaterhouseCoopers and Travers Smith are advising the committee.
Once concluded, a prior year adjustment will be made to the directors' shareholdings table in this year's directors' remuneration report, it said.
Separately, BTG reported it was on track to deliver double-digit growth in annual profit driven by strong demand.
In the financial year that ended in February, gross profit growth and adjusted operating profit growth are both expected to have exceeded 12%, with gross invoiced income growth of over 25%.
This reflects the very strong demand for software and IT services from both corporate and public sector clients, Bytes said.
"With ongoing support from vendors, longstanding and strong relationships with customers, and the hard work of its loyal employees, [Bytes] remains confident in its continuing ability to deliver sustained double-digit growth," the company said in a statement.
By Eric Cunha, Alliance News news editor
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