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Prices & Quotes - UK Markets - Computacenter (CCC)

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Share Price:
Up 2,708.00p
Change Today:
48.00p
Market Cap:
3,322.39m
Sector:
Software & Computer Services

Morgan Stanley initiates coverage of Softcat, Computacenter

By Michele Maatouk

Date: Tuesday 09 Mar 2021

LONDON (ShareCast) - (Sharecast News) - Morgan Stanley initiated coverage of Softcat and Computacenter on Tuesday as it took a look at the software and services sector.
The bank started IT infrastructure provider Softcat at 'overweight' with a 1,750p price target, noting the company has grown 100% organically since inception, delivering 15 consecutive years of net revenue growth, with no use of debt/leverage.

"Softcat benefits from a best-class-returns profile (we forecast 60% return on capital employed for FY21)," MS said. "The company has continued to invest through Covid, while the 50% SME exposure should contribute a sharp rebound in 2021."

The bank said it's confident in Softcat's ability to continue to outgrow the market/drive earnings upgrades. MS forecasts circa 11% organic revenue compound annual growth rate for FY21-24 and about 10% earnings per share CAGR.

"Softcat trades at circa 30xFY22 price-to-earnings or 3.3% free cash flow to the firm yield, above peers - we expect this premium to expand, underpinned by superior growth/returns," it said.

Computacenter was started at 'equalweight' with a 2,300p price target, with MS saying the shares are fairly valued.

"Operating across a wide range of geographies, with a focus on larger enterprises, the company has delivered strong total shareholder return over recent years, driven by consistent earnings upgrades.

"Looking forward, Computacenter has a higher relative reliance on services revenues (24% of revenues), particularly legacy managed services/infrastructure outsourcing (competing with Atos/DXC). We consider this area to face structural challenges as a result of rising cloud adoption."

MS also said there is some risk around the integration of three large deals simultaneously, especially during the pandemic and since the US acquisitions - Fusionstorm/Pivot - appear to be underperforming initial expectations.

As a result, Morgan Stanley said it's more cautious on the growth outlook for Computacenter.

At 1455 GMT, Softcat shares were up 5.8% at 1,509p, while Computacenter shares were 0.9% higher at 2,148p.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

 

Computacenter Market Data

Currency UK Pounds
Price 2,708.00p
Change Today 48.00p
52 Week High 2,710.00p
52 Week Low 1,936.00p
Volume 83,101
Shares Issued 122.69m
Market Cap 3,322.39m

Performance Indicators

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What The Brokers Say

Strong Buy 4
Buy 0
Neutral 3
Sell 0
Strong Sell 0
Total 7
buy
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

Computacenter Dividends

  Latest Previous
  Final Interim
Ex-Div 03-Jun-21 24-Sep-20
Paid 02-Jul-21 23-Oct-20
Amount 38.40p 12.30p

Trades for 23-Jul-2021

Time Volume / Share Price
16:47 1,350 @ 2,708.00p
16:35 17,121 @ 2,708.00p
16:29 7 @ 2,706.00p
16:29 64 @ 2,706.00p
16:29 73 @ 2,706.00p

Computacenter Key Personnel

CEO Michael J Norris