Street Calls of the Week
Investing.com -- J.P. Morgan has placed Computacenter Plc (LON:CCC) on “Positive Catalyst Watch,” raising its price target to £30 for December 2027 from a prior £29 target for December 2026, citing expectations of broad‑based earnings growth across the company’s core regions, sending shares up over 3% on Thursday.
In a recent note, J.P. Morgan said it had raised its FY26 adjusted earnings per share estimates by 3%, driven by a “favourable country‑level mix shift” supporting growth.
“FY26 will mark the first post-pandemic fiscal year where all three of Computacenter’s major profit engines (North America, Germany & UK) will generate yoy % growth in operating earnings.,” the brokerage said. The analysts forecast aggregate adjusted EBIT growth of 7% across the three regions through FY26.
J.P. Morgan expects North American growth to be “supported by continued hyperscale momentum and enterprise spending.”
For Germany, the bank said it expects “a modest public sector recovery through the second half of FY25 with spend levels improving through FY26.”
In the UK, it forecast a “more stable spending backdrop supported by recently announced technology infrastructure investments.”
The brokerage added that stronger earnings growth visibility should underpin more favourable investor sentiment. “We believe this backdrop should result in a higher valuation for the shares,” J.P. Morgan said.
M&A activity was also cited as a potential catalyst. The bank noted that Computacenter is expected to finish FY25 with just over £500 million in net cash, equivalent to around 20% of its market capitalisation. The UK‑based IT services provider and systems integrator returned approximately £200 million to shareholders in FY24.
“We expect M&A to be the preferred use of cash at current, with North America the likely location for future acquisitions,” J.P. Morgan said. The bank projected that acquisitions could add between 5% and 16% to current consensus earnings estimates if deployed at typical multiples.
J.P. Morgan placed Computacenter shares on Positive Catalyst Watch ahead of the Q3 trading update due Oct. 30. The bank left FY25 forecasts materially unchanged, with its adjusted EBIT estimate 1% above consensus.
“We expect the Q325 messaging to lean more positive, with supportive language on the order book and potentially earnings growth through the period,” the note said. J.P. Morgan added that confirmation of strong trading momentum would likely “shift in investor focus towards the clearer earnings pathway ahead through FY26.”