Back in July, I suggested that old favourite Tikit, the legal software firm, was looking like a buy again. The shares were then 307.5p, having come up from an original recommendation price of 167.5p in November 2004. Well, last week the company published a sound set of interim figures – showing revenues up 16 per cent and earnings up 12 per cent – and its broker, Charles Stanley, set a 12-month target for the shares of 410p. Sadly, all that did was encourage a big seller to dump a line of Tikit shares, causing the price to drop to 277.5p.

The rise in earnings (equivalent to 18 per cent on a normal tax charge) was a touch disappointing: Tikit has managed to lift earnings by more than 30 per cent a year over the last three years. But Charles Stanley’s estimate for the current year is still for a rise from 16.3p to 19.3p per share – on the basis of which the shares are now selling on a price to earnings ratio of barely 14. That is a big, and totally unjustified, discount to the sector average and it fails to recognise Tikit’s strong position in the legal software market. Hold your nerve.

Tikit	AIM	£20.49m	141.50p	0.00p
Click here for interactive charting
Other company articles:
Tikit Group			14/08/2008
Tikit Group			13/05/2008
Tikit in line with expectations			18/01/2008
Tikit takes a hit			14/09/2007
Tikit			11/09/2007