Avoid this digital TV software stock until we see some more contract wins
Legal-sector software and consultancy services business Tikit continues to impress. Interim figures to June, released in September, revealed a 190% surge in pre-tax profits to £235,000 from sales up almost £200,000 at £3.9m. Moreover, management has since confirmed that 'second-half trading has been encouraging' and that 'continuing demand for high margin consultancy and support services... and a number of important software sales' mean that full year results, to be released in March, are likely to end up 'in line with market expectations'. According to the forecasts of house broker Charles Stanley, a £1.1m profit before tax and goodwill from £8.4m of revenue is on the cards. Earnings per share are expected to hit 6.2p and, although a current prospective p/e of 19.3 suggests the company's value is far from cheap, Tikit's managers are interpreting the recent upswing in activity as 'signalling a gradual change by clients in considering and committing to larger-scale projects'. This theory is supported by recent press speculation that, after three years of depressed spending, IT budgets in the UK are being ramped up once more. Hold for now, but consider topping up on weakness.
Market cap: £13.6m
PE Forecast: 19.3
Share price: 119.5p
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