On Wednesday, Berenberg initiated coverage on Computacenter Plc (CCC:LN) stock with a Hold rating and a price target set at GBP26.75. The firm highlighted Computacenter as a high-quality business known for compounding its earnings per share (EPS) through both organic growth and acquisitions.
The company's strategy of targeting sales at large corporations and public sector entities, especially in the United States, was noted as a key growth opportunity.
Despite acknowledging Computacenter's strengths, Berenberg expressed concerns over the company's performance in the first half of 2024. The slowdown in corporate hardware spending, difficult year-over-year comparisons, and foreign exchange headwinds were cited as challenges that could impact the company's ability to meet the full-year 2024 operating profit consensus.
The analyst's remarks pointed out that while Computacenter has a solid business model that leverages absolute scale, the recent hurdles faced in H124 have raised questions about the company's forecasted profits for the fiscal year 2024. As a result, Berenberg has set a cautious price target that implies approximately an 8% upside potential from the current levels.
The coverage initiation and the establishment of the price target reflect a conservative stance on Computacenter's near-term prospects. Berenberg's position is based on the premise that the market's expectations for the company's financial performance may be overly optimistic in light of the recent challenges.
Investors are now equipped with Berenberg's latest perspective on Computacenter, as the market continues to assess the company's potential to navigate through the current economic environment and capitalize on its growth opportunities.
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