Bell Potter initiates coverage

Bell Potter has initiated coverage of the Citadel Group (ASX: CGL) with a buy rating and a $7.00 price target. Bell Potter explains that CGL is “a software and services company that provides integration and managed service solutions to state and federal governments departments and the private sector in Australia.” The majority of Citadel’s revenue is derived from long term managed services contracts and advisory services.

Bell Potter points to CGL’s “large addressable growth markets, sticky revenues and clientele, defensible IP, best practice margins, scalable software, unique process and security cleared personnel.”

Bell Potter thinks CGL’s multi-year managed services contracts provide stable, recurring revenue streams, and notes that CGL has 25 managed services contracts generating around 70% of company revenue.