Sophos  (SOPH) 234.8p

Gain to date: 6.4% 

Original entry price: Buy at 220.7p, 28 July 2016

Very robust interim results from cyber security group Sophos (SOPH) show revenues up nearly 10% at $257m, billings rising 16% to $280m, and an ongoing shift to more predictable subscription sales which increased 19% to $223m. If you really want to pick holes, adjusted cash EBITDA margins dipped from 18.8% to 18.2% but this is largely because of product development costs, an expense that underpins future profitability.

The group’s focus on R&D is right; the cyber security market is moving far too fast to stand still and success can be measured to a degree by its Sophos Central suite. That combines its end user and network products and was sold to around 30,000 customers and contributed over 10% of subscription sales in the half year period. (SF)

This remains a high-quality business in one of the most exciting technology spaces.  That it continues to throw off large amounts of cash as it grows is another tick in the box. Investors need to watch growth rates in light of the seismic political shifts seen on both sides of the pond but analysts remain convinced that 320p share price levels remain on the cards. We agree.

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