CAGR FLAGGER. Max Chuard has injected some much-needed optimism into the Temenos investment story. The $10 billion banking software group’s shares surged 18% on Thursday after its chief executive issued new 2025 targets. Chuard reckons the compound annual growth rate (CAGR) for revenue over the next five years will be 10% to 15%, with the operating margin rising to 41%. At the mid-point, that implies an operating profit CAGR of 16% – higher than the median analysts’ expectation of 11% up to 2024, using Refinitiv data. It’s tough to judge whether Chuard’s confidence is warranted. But the share price rally looks overdue. Before Thursday, they were down one-third in a year, partly because of fears that pandemic-hit banks would slash spending. Yet the imperative to improve their services, under the threat from new digital entrants, remains. Temenos now trades at 39 times forward earnings, in line with its two-year average. Chuard’s CAGR swagger should keep them there. (By Liam Proud)