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Why the Bravura Solutions share price is up 150% in 12 months

The Bravura Solutions Ltd (ASX: BVS) share price continued its solid run on Monday and was up 5% at all-time high of $4.79 at one stage.

This latest gain meant that the shares of the provider of software products and services to clients operating in the wealth management and funds administration industries had extended their 12-month return to a staggering 150%.

Why is the Bravura Solutions share price up 150% in 12 months?

Investors have been fighting to get hold of Bravura Solutions’ shares following its strong performance in FY 2018 and positive guidance for the current financial year.

Thanks largely to strong demand for its Sonata wealth management platform, in FY 2018 the company posted a 15% increase in revenue to $221.5 million and a 27% lift in underlying net profit after tax to $27 million.

The good news is demand for Sonata is expected to remain strong this year, with management advising that it expects this to underpin EPS growth in the mid-teens in FY 2019.

What is Sonata?

Sonata is a next generation wealth management administration system which allows users to connect and engage with their clients anytime, anywhere, via computers, tablets or smartphones.

In FY 2018 management advised that Sonata’s compelling value proposition to assist clients in tackling regulatory changes, digital, and the need for a modern and scalable technology platform resulted in Sonata revenue increasing 32% to $122.5 million. This means it now makes up 55% of total revenue.

Given the quality of the product and its long runway for growth, I expect it to continue to underpin the company’s growth for many years to come.

Should you invest?

Despite its impressive run over the last 12 months, I estimate that the company’s shares are currently changing hands at just under 31x forward earnings.

Given its current growth profile, I think this makes its shares reasonably priced for investors that are prepared to hold them for the long-term.

As a result, I see Bravura Solutions as a good buy and hold option along with tech stars Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Bravura Solutions Ltd. 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 Scott Phillips.

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