Listed IT company AdaptIT saw its shares surge 44% yesterday, to close at 55c.
In mid-morning trade today, its stock had cooled somewhat and was trading at 54c, 1.82% lower than its opening price.
Volumes yesterday, however, were low, with only 100 000 shares changing hands.
Warwick Lucas, an analyst with Imara SP Reid, says the low volumes indicate the surge in price is not a prospective buyout.
He adds that, although the price is still cheap with a price:equity ratio of 6.4, the company's shares will “struggle to make ground from here”.
“Someone in the market is buying their shares, although I don't see the justification. They are cheap, but I don't think it's warranted,” Lucas says.
Earlier this month, AdaptIT said revenue improved 60%, to R60.6 million for the six months ended 31 August. The KwaZulu-Natal group said net profit was R4.5 million, compared to R4.2 million in the previous period. Earnings per share increased in line with profit, to 4.73c from 4.36c, an 8% increase.
The company's FD, Siboniso Shabalala, was not available to comment this morning on the company's share movement.
AdaptIT was recently embroiled in the controversy surrounding the contract awarded to it by the Durban municipality to develop its 2010 Soccer World Cup Web site for R6.5 million.
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