GBST price guide reduced

In our update on GBST's final result, we noted that sterling had fallen 12% since the UK voted to leave the European Union. With 40–45% of GBST's profits coming from the UK, all things being equal that alone is enough to knock around 5% off the value of the company. There's also the potential for projects to be delayed if the UK economy slows due to uncertainty over its exit negotiations. Against this is the news that GBST's cornerstone UK client, Aegon, is migrating accounts from recent acquisitions Cofunds and BlackRock to GBST's Composer platform.

Up to a point – and within a margin of error – these things offset each other. However, with the EU looking increasingly likely to play tough in the UK's exit negotiations and sterling now down 18% since the vote, we're past that point. As a result, we're reducing our Buy price on GBST to $4.50 and our Sell price to $7. With the price well below that, though, we continue to recommend that you BUY.

Note: The Intelligent Investor Growth and Equity Income portfolios own shares in GBST. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.

Disclosure: The author owns shares in GBST.