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At 52-week lows is GBST Holdings Limited a buy at this share price?

It has been a year of highs and lows for shareholders of financial services software provider GBST Holdings Limited (ASX: GBT).

Its shares rocketed to a 52-week high of $5.50 in June before they unfortunately got caught up in a Brexit sell off. Since then they have been dropping lower and lower and are now just a fraction above their 52-week low.

It’s not hard to see why investors panicked and jumped ship with the company having significant exposure to the UK financial markets. Unfortunately the depreciation of the British pound and the economic uncertainty that the Brexit has created is making life tough for the company.

In FY 2016 the company saw adjusted net profit after tax fall 31% to $13.4 million thanks partly to the Brexit. Not only was GBST negatively impacted by currency movements, but it also suffered from delayed project starts and reduced services revenue.

Unfortunately, I expect the British pound could yet fall further when the UK’s Prime Minister Theresa May finally triggers Article 50. The PM is expected to trigger Article 50 by the end of March 2017, officially starting the Brexit process.

If the pound does depreciate further then companies which derive significant revenues from the United Kingdom such as GBST, BT Investment Management Ltd (ASX: BTT), and Praemium Ltd (ASX: PPS) could all see their growth hindered.

Which is a real shame because I think GBST is a great company with high-quality software and an exciting future ahead. In fact, recent regulatory changes in the UK market could help the company win new clients and be the catalyst to drive strong growth in its UK businesses.

As tempting as it is to invest I would hold off making an investment for now as the company works through some of its headwinds.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

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