Brokers' Views: Piper Jaffray

US broker Piper Jaffray provides its perspective on two technology companies. It argues that enterprise application management software provider Micro Focus, whose full-year results satisfied expectations, has a ‘robust’ outlook in spite of uncertainties related to its looming acquisition of Nasdaq-listed peer Borland.

As the takeover closes in on completion, the focus moves to the risks surrounding its integration. Assuming ‘further declines in the short term and margin progression as Borland is digested’, analysts forecast that earnings will jump 19 per cent to 50.2 cents (31p). Should the deal complete, the shares are a buy with a 500p price target.

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Corporate client Protonex, the maker of portable power sources for military and consumer markets, is another buy, despite encountering a tough first half in which much military spending was temporarily frozen following the change in US administration.

AIM-quoted Protonex lost $7.5 million on lower sales of $2.6 million, although its cash burn rate was ‘in line with expectations’ and the net $17.5 million on the balance sheet leaves the group with ‘around two years to fund its route to market’.

Confident about the second half, noting that $5.5 million of military product deals have been signed, the broker believes Protonex’s consumer battery extender will ‘hit the US recreational vehicle market in 2010’, which should ‘significantly’ drive revenues in the second half of 2010 ‘as America pulls out of recession’.

Targeting 48p for the 32p shares, Piper insists ‘Protonex is well funded and should successfully transition from a military R&D enterprise to a commercial business’.