Broker snap: Sell Misys, says Merchant Securities

LONDON (ShareCast) - Merchant Securities has given financial software provider Misys (Xetra: 944235.DE - news) a sell rating following the news that the firm is in talks with a suitor. The group said it is in preliminary discussions with Temenos Group (Other OTC: TMNSF.PK - news) , a Swiss provider of banking software, regarding a possible strategic combination to be effected by way of an all share merger. "No details are yet known as to the above announcement from Misys (beyond the all-share element), but we see this as borne out of increasing risk to consensus second half estimates," said Merchant analyst Roger Phillips. "Our investment thesis remains that Misys is reliant on continual M&A activity, with questionable returns for the deals of the past, to cover for abject organic performance," he said. The broker gives the stock a 220p target price, well below yesterday's closing price of 325.5p. Today, the stock was trading down 0.77% at 323p by 11:20. BC