AVV.L Share News (AVV)

(Sharecast News) - Aveva said on Wednesday that its full-year outlook remains in line with the board's expectations and that it aims to increase its adjusted EBIT margins to 30%.In an update ahead of its capital markets day later, the company said it has continued to deliver constant currency revenue growth in the year to date and aims to grow medium-term revenue on a constant currency basis at least in line with the industrial software market, which is growing at a mid-single digit rate.Aveva said the target reflects expectations of growing its underlying software business in excess of market growth rates thanks to the strength of its market positions, sales execution, revenue synergies and additional value levers including pricing.The company also set out its medium-term plans to increase EBIT margins to 30% versus 23.5% pro forma in FY18, on the back of revenue growth, cost savings, cost control and a focus on high-margin revenue growth through pricing and revenue mix optimisation.Meanwhile, the proportion of recurring revenue to total revenue will be increase from 52% to over 60% in the medium term."The transition to greater levels of recurring revenue is expected to increase long-term free cash flow generation. Rental & subscription offers customers benefits including greater flexibility, lower up-front costs and simplicity in pricing. These benefits are reflected in higher customer life-time value of a rental & subscription model versus a perpetual licence model."Numis upped its stance on the stock to 'buy' from 'add' following the update and lifted its price target to 3,400p from 3,220p, saying that the medium-term targets are "clear and positive".On the back of increased margin forecasts, Numis upped its FY20 earnings per share forecast from 84.3p to 90.8p and FY21 EPS estimate from 92.0p to 102.5p.At 0930 BST, the shares were up 5.5% to 2,964p.