Overview of HPS's Recent Performance
The first half of 2025 for HPS was impacted by accounting adjustments related to the integration of its Irish subsidiary, CR2, which temporarily affected performance assessments.
Despite these challenges, HPS demonstrated a strong recovery trajectory in the third quarter, achieving results in line with previously announced guidance.
Third Quarter Financial Highlights
In Q3, HPS reported operating revenues of 358 million DH, reflecting a year-on-year increase of 21.4%, which underscores the resilience of its operational model.
BKGR anticipates that this positive momentum will continue into the fourth quarter, driven by revenue recognition from significant On-Premise projects and a gradual ramp-up of SaaS contracts, enabling the group to meet its annual targets.
Record Backlog and Market Opportunities
As of September 2025, HPS boasts a record backlog of 1.695 billion DH, bolstered by major On-Premise projects secured in 2025.
This substantial order book provides high visibility for the remainder of the current fiscal year and into 2026.
BKGR also notes that increasing competition in the acquisition sector in Morocco is likely to boost transaction volumes, presenting HPS with an opportunity to enhance its market share in the Switching segment.
Unchanged Forecasts and Growth Trajectory
Given the strong performance in Q3, BKGR has kept its forecasts largely unchanged, projecting operating revenues of 1.508 billion DH for 2025 (up 19%) and 1.633 billion DH for 2026 (up 8.3%).
The group's net income is expected to reach 88 million DH in 2025 and 96 million DH in 2026, with a marked acceleration anticipated starting in 2027.
Transition to SaaS and Strategic Focus
HPS is actively pursuing its transition to a SaaS model to increase the proportion of recurring revenues.
This transitional phase is temporarily impacting margins due to necessary investments in cloud infrastructure, cybersecurity, and regulatory compliance.
However, BKGR believes that this transformation will facilitate a gradual restoration of profitability by 2027, in line with the ACCELR8 strategic plan, which aims for annual growth exceeding 20%.
Additionally, the group is refocusing on its core business by divesting its low-margin Testing segment and integrating CR2.
A new external growth initiative in fintech, particularly in artificial intelligence, is also being considered by 2027.
Valuation Insights
BKGR employs a discounted cash flow (DCF) method for valuation over the 2025–2034 period.
Despite a slight increase in the risk-free rate to 2.77%, the model indicates a price target of 705 DH.
The research office highlights that while the current valuation remains demanding in the short term, with a price-to-earnings ratio of 59.7x in 2024, it is expected to normalize gradually to 46.9x in 2025, 44.7x in 2026, and 26.3x from 2027 onward, driven by the growth of recurring revenues and anticipated improvements in profitability.
Market Performance and Outlook
Since the beginning of the year, HPS shares have declined by 9.4% year-on-year, fluctuating between 520 DH and 580 DH during the autumn months.
This decline was exacerbated by the release of semi-annual results that fell short of expectations.
However, the reassuring Q3 results have allowed the stock to rebound, reflecting renewed market confidence.
Considering the operational recovery observed in Q3, the record backlog, and the visibility provided by the transition to the SaaS model, BKGR reiterates its buy recommendation for HPS and raises its price target to 705 DH, asserting that the potential remains significant despite ongoing short-term margin pressures.