In a note that also raised the IT firm’s target price to 2,150p from 1,500p, Berenberg said they had downgraded the firm “too early” and were now “more confident about the company’s long-run growth outlook”.
“The US business has turned a corner, Germany remains very strong and the UK is making margin progress. Heading into next year, structural tailwinds look set to persist and the early attempts at cross-selling between the US and European businesses should improve”, Berenberg said.
Analysts also highlighted that the company’s guidance of a 3% compound annual growth rate in earnings per share was “notoriously conservative” and they believed that there was upside to the numbers.
The bank added that they had assumed the firm will deliver “double-digit organic revenue growth” in its US business, as well as the deployment of around £150mln in cash through either a share buyback at 1,800p each or an acquisition within the next 12 months.
“We just cannot envisage a scenario in which management will hold on to its cash position much longer”, Berenberg said.
The upward revision follows a strong trading update from Computacenter last week, when the firm hailed what it said was one of its “most successful years” in 2019, with both revenue and profits reaching their “best ever” levels.
The shares were lifted 1.3% to 1,815p in late-morning trading on Monday.