Sage Group: Jefferies Remains Bullish, Sees Attractive Valuation

Jefferies has reiterated its positive stance on Sage Group (LON:SGE), lowering its price target to 1,320p from 1,480p while maintaining a Buy rating on the software provider’s shares in a note this week.

Analyst Charles Brennan acknowledged investor concerns around slowing annualised recurring revenue (ARR) growth, which has weighed on consensus forecasts.

However, he argued the market is overstating the potential downside. According to Brennan, the risks tied to Sage’s ARR trajectory are relatively small and can be measured in basis points rather than any material shift in performance.

Jefferies’ revised price target reflects a more cautious outlook, but the broker said Sage’s valuation remains compelling.

Brennan believes that although there has been a moderation in growth expectations, Sage's current share price presents an attractive entry point. He emphasised that the reaction to softer ARR growth has been disproportionate.

The call follows a July update from Morgan Stanley, which trimmed its target to 1,400p from 1,485p but also kept an Overweight rating.

Morgan Stanley’s research, based on a review of the $6 billion mid-market enterprise resource planning and accounting software sector, positioned Intuit as the best-placed player but highlighted significant opportunities for Sage and rival Xero.

Both houses point to Sage’s steady positioning in a consolidating market. For Jefferies, the combination of manageable risk and attractive valuation supports its bullish stance, even with tempered near-term expectations.

Shares in Sage have faced pressure in recent months and are down over 14% this year as investors weigh growth concerns, but analysts argue the long-term runway for the group remains intact.