Iona Technology shares re-rated upwards

IONA TECHNOLOGY shares were re-rated upwards by most stockbroking analysts yesterday following the company’s better than expected third quarter revenues of $17.4m.

Davy Stockbrokers analysts Barry Dixon and Richard Quinn were the most bullish and ended a detailed note to clients yesterday with the following: “Overall, the results show that the worst is over for Iona.

"We expect the share price to rise substantially to reflect IONA’s valuation levels relative to its peers, which trade at a significant premium to IONA.”

Rivals Goodbody Stockbrokers were more cautious, upgrading their advice from a reduce to add.

The Davy duo said IONA’s Q3 results indicate in two important respects that the worst is over for the company.

“It has reached the bottom of its revenue base, and is now on track to reach EBITDA profitability in Q4. We are upgrading our adjusted EPS figures next year by 13% from 1.5c to 1.7c,” they said.

Merrion Stockbrokers also believe IONA’s worst days have past.

“Better than expected revenues of $17.4m and a more significant reduction in operating costs than expected signal a turn in IONA’s fortunes and we can probably now conclude, with a fair degree of confidence, that Q2 2003 represented the nadir.

“Breakeven is now within sight, most likely in early 2004.

"Of course, investors will need more than one quarter of such progress but given the size of decline in revenues from early 2002 to mid-2003 (where over the period revenues declined by circa 50%), the potential for a strong recovery in revenues is high,” said Merrion’s Rory Gillen.

NCB analyst Tricia McEvoy also upgraded the shares which saw a high of $101.30 in March of 2000 during the tech boom to a buy. The shares traded around the €3.15 mark yesterday.