Daily Stock Market Report (Mon 21st September) - CRW, AAZ, ELIX, AXS

Good morning, the news flow over the weekend was fairly quiet from a UK perspective. Just a couple of political headlines worth noting:

• The US and China have been holding talks on AI, trade and investment ahead of a summit this week between Donald Trump and Xi Jinping. For a preview of this summit, please see Mark’s Week Ahead article on Friday.

• In Germany, the ruling Christian Democratic Union had another terrible state election and is projected to win less than 5% of the vote in Mecklenburg-Western Pomerania (a north-eastern state). Most votes were shared between the AfD and SPD.

Right, let’s get on with today’s company news!

Overnight market movements:

• The FTSE is up 0.3% at 10,685

• S&P 500 is up 0.5% at 7,680

• Brent crude (November) is down 1.5% at $99.10/bbl

• Gold is down 0.6% at $4,355/oz

• Bitcoin is up 0.7% at $81,650

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Companies Reporting

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Graham's Section

Elixirr International (LON:ELIX)

Down 12% at 547p (£278m) - Interim Results - Graham - PROFIT WARNING (sort of!) (AMBER ↓)

Exlixirr is “an established, global award-winning, challenger consultancy”.

I was moderately positive on it back in April, saying that a P/E of about 10x was about as high as I’d be willing to pay for a consultancy.

Some weakness since then has seen the rating fall back to 9x, and it’s lower again today:

Highlights today:

Organic growth is 5%, lower than it was in FY 2025 (15.3%) and massively lower than the headline revenue growth rate of 25%.

Adjusted EBITDA is up 29%, with of course the majority of this growth being inorganic.

Adjusted PBT also rises strongly, up 26% to £25.1m.

I note that adjusted EPS increases at the lower rate of 18%, hinting at some equity dilution.

Turning to the unadjusted (statutory) figures, I see that actual PBT comes in at £18m, nearly 30% lower than the adjusted figure. There are £7m of adjustments:

My main objection here is to share-based payments (SBPs), which were £2.2m in H1 last year and £2.6m in H1 this year.

So for me, the real PBT figure is £22.5m (adjusted PBT of £25.1m, minus SBPs of £2.6m).

Some might argue that the “M&A related items” are a feature of the strategy, and are therefore recurring, but I’m happy to treat them as a voluntary growth expense rather than a real cost of the underlying business.

Balance sheet: negative tangible equity to the tune of some £58m. A year ago, tangible equity was close to zero, so there’s been an enormous shift over the last 12 months.

Working capital: A year ago, working capital (current assets minus current liabilities) was minus £6m. In this report, it’s minus £10m.

Net debt: this has soared from £11m in June 2025 to £61m in this report. Even excluding leases, the company calculates a net debt figure of £56.5m.

The company says that its leverage ratio (net debt divided by annual EBITDA) is only 1.1x, which is a modest ratio and well within covenants. But for people businesses such as consultancies, I don’t consider this to be ideal. When I looked at Elixirr in April, net debt was only £24m.

Let’s check the outlook now:

Our scalable business model supported by an increasingly diversified platform spanning capabilities, geographies and industry verticals provides multiple avenues for growth. This, combined with our focus on quality of earnings and higher margin work, gives the Board confidence that total adjusted EBITDA for FY 26 will be in line with market expectations and revenue will be broadly in line.

This sounds to me like we should expect a slight revenue miss but with higher-margin work hopefully keeping earnings in line with expectations.

Estimates: thanks to Cavendish for publishing on this today. The leave EPS forecasts unchanged: adj. EPS of 67.5p this year, rising to 71.5p next year.

But they’ve also materially cut their revenue forecasts, by about 4% for each year. So for example, the new 2026 revenue forecast is £180m (previously £187m).

Interestingly they also cut their PBT forecasts by 2-4%. This doesn’t translate into lower EPS because they don’t expect the share price to rise by as much as they did before (could be because of lower expected SBPs or less acquisition-related dilution). Without knowing their exact reasoning, it seems to me that a slight reduction in the EPS forecast might have made more sense?

CEO comment focuses on AI, naturally enough:

“AI is changing what our clients need from us. Businesses are moving quickly from asking what AI can do to working out how they can use it to transform the way they operate and grow. We have built a powerful combination of consulting, technology, data and AI expertise to help them do that, with AI-related revenue increasing by 185% in the first half.

“The scale of the opportunity ahead is significant. Industry research estimates that agentic AI alone could create up to $200 billion of new demand for technology services over the next five years. We have spent the last six years deliberately building our consulting, AI, data and technology capabilities to benefit from this shift.

Graham’s view

Technically this is not a profit warning, but it’s very close to one. I’m going to record it as a profit warning for the purposes of our record-keeping.

I’m also going to reduce our stance on this to neutral, as an organic growth rate of 5% - which is now baked into Cavendish forecasts - doesn’t scream to me that this is a company fully benefitting from the AI trend.

As I’ve said before, there’s a ceiling on what I’d be willing to pay for a consultancy business. At the latest share price and EPS forecasts, I calculate the current-year P/E as 8x, falling to 7.6x for next year.

That does potentially offer some value, but perhaps not so much when you consider the hollowed-out balance sheet.

So for me, this is an AMBER, with the potential for us to take it back to AMBER/GREEN when there’s better news.

The StockRanks arrived at a neutral score before I did:

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Roland's Section

Craneware (LON:CRW)

Down 24% at 1,020p (£259m) - FY26 Final Results - Roland - PROFIT WARNING (AMBER/RED =)

We’ve been on a downgrade cycle for this US-focused healthcare financial software business.

Graham cut our view to neutral in early July, when Craneware warned on profits regulatory headwinds in its 340B activities.

I followed this by cutting our view to AMBER/RED in late July, when the company suffered a cyber attack.

While today’s FY26 results are in line with July’s revised forecasts, management’s outlook commentary appears to include a further profit warning for FY27. Updated analyst forecasts that I can see this morning have cut FY27 EPS forecasts by 20%.

Craneware shares have now fallen by more than 50% over the last year:

FY26 results summary

Today’s results are in line with July’s revised forecasts but do not provide a very encouraging picture, with all key numbers largely flat versus last year.

These figures cover the year to 30 June 2026, so don’t include the period affected by July’s cyber attack:

• Revenue unchanged at $206.0m (FY25: $205.7m)

• Annual Recurring Revenue (ARR) of $185m (FY25: $184m)

• Adjusted EBITDA up 3% to $67.1m

• Reported pre-tax profit up 7% to $25.8m

• Adjusted EPS up 0.6% to 116.8 cents

• Net cash down 60% to $11.3m (following a $25m buyback)

These results need to be seen against the unexpected developments in the 340B market over the last year. 340B is a US federal scheme that allows hospitals to buy outpatient medicines at a discount for supply to low-income patients.

Craneware’s exposure to 340B increased significantly in 2021 when it acquired Sentry Data Systems for $400m ($312.5m cash & $87.5m in new CRW shares) – equivalent to a pricey 17x 2020 EBITDA.

Unfortunately the goal posts have started to move for the 340B program over the last year:

The program continues to evolve as manufacturers seek to unilaterally control the 340B program, introducing more stringent data submission requirements, and the legislature attempts to clarify regulations, proposing trialing the use of rebate-based processes rather than discounts applied at the point of purchase. Under these more stringent data requirements and rebate model, eligible US hospitals and clinics would pay a higher initial price and then submit validated transaction data to receive the 340B benefit. This would increase working capital, data, reconciliation and compliance requirements for providers.

As a result, customers have been understandably reluctant to commit new spending to Craneware’s 340B products:

While our software identified a considerable amount of available 340B opportunity for our customers in H2, and activity levels with customers remained high, the uncertainty in the market meant that this did not translate into revenue, and we did not see the expected growth in our 340B related transaction revenue as a result.

The good news seems to be that when the dust settles, the 340B program is still likely to offer an opportunity for Craneware, whose c.40% market penetration in the US makes it an important incumbent software supplier.

The company also has other irons in the fire as well and believes that AI is likely to be an opportunity rather than a risk for the business. Today’s results highlight a number of new contract wins, with an increased proportion of business with new customers:

We are pleased to see sales to new customers increase as a proportion of total new sales, to 10% from 2% a year ago, following an increased level of competitive takeouts and new wins, reflecting the increased strength of our Revenue Integrity offerings. Bringing new customers into the Group provides for further expansion opportunities that support revenue growth in future years.

Outlook & Updated Guidance

Craneware expects the 340B situation to stabilise as the year progresses, with tailwinds “expected to build in H2 FY27”. However, my impression is that the timing of any recovery is still somewhat uncertain – changes to 340B have not yet been finalised.

The impact of the recent cyber attack is expected to be a further drag on performance this year:

While the immediate impact of the security incident has been contained, the full financial outcomes are yet to be quantified, including the impact of future customer engagement.\

This sounds slightly ominous to me – will customers be reluctant to sign new contracts with Craneware due to security concerns?

Management has confirmed today that the data accessed in the attack included “Craneware employee data and a subset of customer and partner records”.

A profit warning isn’t all that surprising in the circumstances, but penalty points go to Craneware for the unnecessarily complicated wording of today’s FY27 guidance:

Therefore, while the Board remains confident in the long-term outlook for the Group and the growth opportunities, it is taking a prudent view of its revenue expectations in FY27, resetting them to the equivalent of the Company’s Annual Recurring Revenue of c.$185m.

The upshot is that revenue guidance for the year has been cut to c.$185m, 17% below previous consensus of $222m (according to the StockReport).

With thanks to Capital Access and Research Tree, I have access to updated forecasts this morning. Earnings estimates have been cut by 20%:

• FY27E adj EPS: $1.00 (-20% vs $1.25 previously)

• FY28E adj EPS: $1.12 (-20% vs $1.40 previously)

After this morning’s share price fall, these forecasts put Craneware on a FY27E P/E of 14x. That’s unusually low for this business:

Roland’s view

Craneware is a founder-led business with a large market share and a long track record. It’s an example of the type of business I often like to invest in.

However, I am generally cautious when I see multiple problems converging on a business at the same time. The reason for this is that even a well-run and strongly capitalised business (as I think Craneware probably is) can suffer in these circumstances.

The impression I get from today’s results is that earnings visibility for the year ahead could still be quite limited. I think it’s fair to assume there will be additional costs and a more difficult sales environment than usual.

Despite this, I’m inclined to keep an eye on this situation as a possible turnaround buy at some point. In my view, the valuation has fallen to a level where it could be quite interesting, while the longer-term growth prospects still seem significant.

I’m leaving our view at AMBER/RED today, but I think this is a situation that could be worthy of further research.

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Anglo Asian Mining (LON:AAZ)

Up 13% at 417p (£480m) - Interim Results - Roland - AMBER ↓

I’m not surprised to see shares in this copper, gold and silver miner rising today. Leaving aside the company’s very strong financial performance in H1, AAZ has also cut full-year cost guidance for copper after costs came in below guidance in H1.

Let’s take a look.

Half-year results summary

Anglo Asian has a portfolio of mining assets in Azerbaijan. As Graham has commented previously, it’s a relatively high cost producer.

The resulting operating leverage from higher commodity prices over the last 12 months has driven a spectacular increase in profitability and cash generation. Half-year performance was also helped by the first six-month contribution from the group’s Gilar and Demirli mines:

• Revenue up 245% to $114.2m

• Pre-tax profit up 865% to $68.5m

• Net cash of $57.7m (Dec 25: $2.6m)

• Interim dividend of 6 US cents per share

An ongoing ramp-up in copper production means the red metal is expected to be the company’s primary output from 2026 onwards. Progress towards this goal was positive in H1:

• Copper production up 644% to 8,840 tonnes

• Gold production up 2% to 12,329 ounces

• Silver production up 49% to 92,855 ounces

Half-year costs were below expectations for both gold and copper:

• Gold: $1,224 per ounce

• Copper: $5,158 per tonne

Outlook & Updated Guidance

The growth in copper means today’s cut to cost guidance is particularly significant – likely outweighing an expected shortfall in gold production:

• Copper: full-year production guidance unchanged at 20,000 to 25,000 tones with reduced All-In-Sustaining-Cost (AISC) guidance of $6,000 to $7,000 per tonne (previously $6,800 to $7,800)

Using the mid-points of these guidance figures, I estimate this could equate to a c.$18m cost saving on copper production this year.

• Gold: full-year production guidance reduced to 26,000 to 30,000 ounces (previously 28-33 koz) due to lower-than-expected recoveries in H1.

• Silver: full-year production guidance of 170-210 koz is unchanged.

At current gold prices (c.$4,300/oz), this reduction to gold production could cost c.$10m in lost revenue, so perhaps c.$7m in lost operating profit, offsetting some of the additional profit expected from copper.

I don’t have access to updated broker forecasts today. But some guesstimates on my part suggest the net impact of these changes could be to lift expected 2026 operating profit by c.$10m, or perhaps c.$7m after tax.

That would equate to a c.8% upgrade to the consensus net profit figure of $90m shown on the StockReport. That’s broadly consistent with the 13% share price rise at the time of writing.

Of course, these estimates could quickly become (even more) inaccurate if gold and copper prices change significantly in either direction.

Roland’s view

Anglo Asian shares continue to look superficially cheap, on around 6.5x forward earnings. However, this is a common characteristic of miners during periods of high commodity prices and not necessarily an indicator of fundamental value:

If prices remain high or climb further, then the bull case here could remain intact. Even so, I think it’s probably prudent to consider some of the risk factors.

Anglo Asian is quite a high cost producer, especially in copper. Although the current copper price of $14,650/t leaves ample room for profit, it’s worth remembering that the price was less than $10,000/t a year ago.

With costs running at $6,000-7,000 per tonne, a move back towards that level – for any reason – could quickly wipe out much of the company’s profit.

Political risk in Azerbaijan may also be worth considering. The company’s website notes that its current mining rights at Gedabek only extend until March 2027 and reminds us that the Azerbaijan Government “restored its sovereignty” over the Karabakh region containing the Demirli mine in 2023.

I don’t know anything about Azerbaijani politics or the company’s relationship with the local government. But I think it’s worth considering the risk that the fiscal or operating environment could become less favourable at some point in the future.

Graham was AMBER/GREEN on Anglo Asian in May, to reflect the StockRanks’ High Flyer styling.

The High Flyer styling remains, but the stock has doubled over the last six months without any corresponding increases to earnings forecasts. Indeed recently introduced broker forecasts suggest earnings could fall next year:

Although today’s cut to copper cost guidance has further improved the economics of the business, I would argue that any further upside here is likely to be dependent on commodity prices, making this a highly speculative situation.

While I’m not a chartist, I also wonder if the technical picture is also weakening. Volumes have fallen steadily since the stock’s re-rating in June/July:

On balance, I think it’s prudent to move to a neutral view today to reflect the speculative nature of this situation. AMBER