Jefferies analyst Charles Brennan maintained a Sell rating on Softcat today and set a price target of p1,400.00.
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Charles Brennan has given his Sell rating due to a combination of factors related to Softcat’s financial performance and future projections. While the company has reported impressive growth in gross profits and EBIT, surpassing expectations, these figures are bolstered by large deals that may not be recurring. The management has indicated that the growth base for the upcoming fiscal year remains unchanged, suggesting that the exceptional growth might not be sustainable.
Furthermore, the balance sheet reflects a significant increase in contract liabilities, attributed to a large deal that will be recognized in the following year. This implies that the current financial results are influenced by one-off transactions, which could lead to volatility in future earnings. Brennan’s analysis suggests caution, as the underlying growth without these large deals does not show a substantial increase, leading to a conservative outlook on the stock’s performance.
According to TipRanks, Brennan is a 5-star analyst with an average return of 10.1% and a 63.08% success rate. Brennan covers the Technology sector, focusing on stocks such as Temenos, Capgemini SE, and SAP SE.
In another report released on October 17, UBS also reiterated a Sell rating on the stock with a p1,400.00 price target.