TNE: Index Inclusions And Special Dividend Will Support Future Upside

Analysts have slightly reduced their price target on Technology One from A$45.70 to A$44.55, citing a modestly higher discount rate and lower margin assumptions that more than offset stronger expected revenue growth.

What's in the News

• Technology One is actively seeking disciplined acquisitions to add new intellectual property and support inorganic growth, leveraging its strong cash flow and AI enabled platform (company results commentary)
• The company announced a special dividend of 10.0 cents per share for the six months ended September 30, 2025 (company announcement)
• The final dividend was increased to 20.0 cents per share for the six months ended September 30, 2025, up 15% on the prior comparable period (company announcement)
• Technology One was added to the S&P/ASX 50 Index, reflecting its growing scale and market significance (index provider)
• The company was also included in the S&P International 700 and S&P Global 1200 indices, broadening its exposure to global investors (index provider)

Valuation Changes

• Fair Value: reduced slightly from A$45.70 to A$44.55 per share, reflecting a modestly lower valuation despite stronger growth assumptions.
• Discount Rate: increased marginally from 7.96% to 8.02%, which implies a slightly higher required return and risk adjustment.
• Revenue Growth: raised slightly from 18.57% to 19.10%, which indicates improved expectations for top line expansion.
• Net Profit Margin: lowered modestly from 27.69% to 26.19%, which signals some anticipated pressure on profitability.
• Future P/E: reduced from 74.53x to 68.71x, which points to a somewhat less demanding earnings multiple on forecast profits.