Is the Bravura Solutions (ASX:BVS) share price a buy?

Is the Bravura Solutions Ltd (ASX:BVS) share price in the buy zone? Here's why one leading broker thinks it is…

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The Bravura Solutions Ltd (ASX: BVS) share price was out of form on Wednesday and dropped lower.

The financial technology company's shares fell 2.5% to $3.35.

Why did the Bravura share price drop lower?

Today's decline appears to have been driven by concerns over the company's ability to deliver on its guidance for FY 2021.

Yesterday at its annual general meeting, management revealed that it was facing sizeable headwinds due to the COVID-19 pandemic and Brexit and thus was forecasting a flat full year profit.

However, it was the significant weighting to the second half which is likely to have spooked investors.

Bravura's chief executive officer, Tony Klim, explained: "In October 2020, we also flagged that the second wave UK lockdowns and stalling Brexit negotiations have increased uncertainty and are slowing the progress of pipeline opportunities in the UK. As a result, Bravura expects FY21 NPAT to be weighted approximately 80% to the second half of FY21."

Is this share price weakness a buying opportunity?

One broker that sees the weakness in the Bravura share price as a buying opportunity is Goldman Sachs.

This morning the broker retained its buy rating and $4.50 price target on the company's shares, even though it expects it to fall short of its guidance.

It commented: "In conjunction with its 2020 AGM, BVS further specified that it expects FY21 NPAT to be c.80% weighted to 2H21. We forecast FY21E NPAT of A$38.2mn, down 5% from A$40.1mn in FY20E, comprised of A$10.9mn in 1H21E and A$27.2mn in 2H21E (71% weighted to 2H). Note, our forecasts exclude the impact of the Delta acquisition, which we previously published could be EPS accretive."

Why does Goldman like Bravura?

The broker's buy rating is based on four key reasons.

They are its strong market position in existing product offerings (with a high degree of recurring revenue), the emerging microservices ecosystem strategy, a net cash position that provides its with a buffer in uncertain times and flexibility to invest and pursue further acquisitions, and its undemanding valuation.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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