Shares in 7digital surge after positive half year result

Online music company 7digital's shares snapped higher after saying its transition towards a business model based on licensing and away from downloads was progressing in line with expectations. 7digital said it expected group turnover to rise about 3% to £5.2m with turnover from technology licensing expected to jump by 27% to around £3.1m.Gross margins improved to 60%, up from 49% during the same period last year thanks to the shift in its business model towards licensing.The company also announced new contracts over the last quarter to the tune of £1.9m in value, spanning South America, Australia and the UK. 7digital chief executive Simon Cole said the company was thrilled by the continued build up in momentum over the last 12 months.The board said it was still confident of meeting expectations for the full-year expectations thanks to a "healthy sales pipeline for 2015".Investec held on to its 'buy' recommendation for the shares, kept its 36.0p target price, and said 7digital stock was good value."It is well positioned with a flexible global platform to leverage as streaming goes mainstream and beyond mobile, plus new segmentation trends," analyst Steve Liecht said.FinnCap kept a 'corporate' rating on the stock and a price target of 38p."With the recent launch of Apple Music, the global music industry is being forced into change and with its radio and streamed music experience, content and technology, 7digital is uniquely positioned to benefit," FinnCap said in a research note e-mailed to clients.Shares in the company were up 11.28% at 17.11p on Thursday at 13:46.