Why the GBST share price jumped today

The GBST Holdings Limited (ASX: GBT) share price climbed 2% to $2.60 this morning after the financial technology business today upgraded its guidance for operating EBITDA “before strategic R&D” to $20 million for financial year 2019. The group stated the upgrade was due to “greater certainty around client take-up and an ongoing focus on delivering our transformation.”

The stock has probably not climbed further on news of the upgrade as the metric GBST is referring to in “operating EBITDA before strategic research costs” does not mean a great deal, as among other things, lower research and development costs may not be a long term win for the business.

On the bright side management also confirmed it has a “solid revenue foundation” for FY20 on the back of a strong pipeline of new client activity.

Further, it has also signed a 10-year contract to deliver a “major back office transformation program” with Canada Life UK using GBST’s composer platform.

GBST is one of a number of financial technology or platform businesses on the ASX with substantial operations in the Brexit hit UK financial services market. Recently, Link Administration Holdings Ltd (ASX: LNK) blamed a UK slowdown for a big profit downgrade, while others such as Iress Limited (ASX: IRE) are also exposed to any further slowdown.

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Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended GBST Holdings Limited, IRESS Limited, and Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019

Source link Finance News Australia

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