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Goldman Sachs: Praemium shares are a buy

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It’s not the most well known company on the local share market, but the analysts at Goldman Sachs are still bullish on digital investment administration platform provider Praemium Ltd (ASX: PPS).

On May 20 Goldmans’ analysts took another look at the fintech player on the back of its announcement that it had signed a new deal with audit and accounting firm Pitcher Partners.

Goldmans’ analysts believe the deal means that Praemium’s competitive position versus larger rivals such as Hub24 Ltd (ASX: HUB) is still reasonably strong and gives them a renewed confidence in the outlook.

Using a blended discounted cash flow and EV to 15.3x FY20’s estimated EBITDA valuation model Goldmans has slapped a 52 cents 12-month share price target on Praemium. This means it has plenty of room to move higher from today’s price of 38 cents if Goldmans is on the money.

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd and Praemium Limited. The Motley Fool Australia has recommended Hub24 Ltd and Praemium Limited. 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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