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Computacenter downgraded by UBS as profits growth expected to slow

The Swiss bank reduced its recommendation to ‘sell’ from ‘neutral’ and upped the price target to 1,625p from 1,485p

Computacenter plc - Computacenter downgraded by UBS over slow profits forecast

Computacenter plc (LON:CCC) shares dropped on Thursday after UBS downgraded to a 'sell' recommendation as 2020 profit growth is expected to slow.

The Swiss bank reduced its rating from ‘neutral’ but upped the price target to 1,625p from 1,485p as it sees weak comparables and stronger headwinds for the current year.

READ: Computacenter says digitalisation compensating for challenging economic conditions

Analysts said weak economic growth in the UK and Germany is likely to hit the company’s accounts, considering they drive over 80% of its profits.

The two countries’ GDP are expected to grow by 0.9% and 0.6% respectively, and Computacenter’s clients are mostly large organisations with IT budgets under pressure.

Profit before tax estimates, however, were upped to £143mln from £134mln for 2019 and to £146mln from £137mln for 2020 on the back of progress in problem contracts in Germany.

“Digitalisation remains a supportive trend, but automation and competition are likely to continue to pressure growth in managed services, while the Windows 10 upgrade cycle is also starting to mature,” analysts added in a note.

Shares fell 3% to 1,710.5p on Thursday morning.  

Quick facts: Computacenter PLC

Price: 1342 GBX

LSE:CCC
Market: LSE
Market Cap: £1.53 billion
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