The upgrade of the target price is attributable to the upward revision of our 2018 estimates (see the related comments).

Prodware had a strong start to the year which is expected to continue in Q2 18 at least. Prodware reiterated its focus on higher profitability and the generation of cash flow in 2018.

The stock is still trading at a low 2018E P/E ratio, below 10x, despite the significant outperformance of the share price (+24% ytd) vs the software sector (+7% ytd) – situation on 30/05/18.

2018E adjusted EPS is revised upwards to €1.61/share (vs €1.57/share previously).

The upgrade is due to the upward revision of total revenue following the dynamic trend in Q1 18 (+4.9% at constant perimeter).

2018 revenue is now estimated at €172.3m (vs €170.5m previously) taking into account the expectation of strong revenue growth at constant perimeter in Q2 18 and Q4 18 (respectively +4.5% and +6% estimated) and a slight decrease at constant perimeter in Q3 18, traditionally the weaker quarter of the year (-1% estimated) considering the high basis of comparison last year.

We maintain our estimate of an EBITDA margin of 18.6% of revenue in 2018 (+0.3pt) and will update it when H1 18 revenue and results are published.