Stifel has lowered its recommendation on Computacenter PLC to Hold from Buy, even as it lifted the company's price target to 3,584p from 3,000p. The U.K.-listed IT services provider has delivered strong near-term performance, but Stifel says the stock now trades close to fair value, limiting the case for further gains.
In a research note, analyst Peter McNally highlighted the combination of better revenue and profit projections and an expanded backlog as reasons for increasing the price target. However, he added valuation considerations as the decisive factor behind the downgrade.
"Despite solid performance and an "AgreeYa-able" acquisition, we downgrade to Hold (from Buy) based on our view of the shares reaching near fair value," McNally wrote.
Market reaction was swift. Computacenter shares were down 3.2% in London by 10:56 GMT on the day of the note.
Results underpinning the view
Commenting on the firm’s full-year trading statement, Stifel noted that Computacenter continued to outpace peers, with gross invoiced income - or GII - rising 32% in fiscal 2025, a performance largely driven by strength in Technology Sourcing.
McNally emphasized that gross profit is the more relevant gauge of operational progress and expects gross profit growth of 8.3% for the year. He pointed to regional performance as broadly supportive: North America led expansion on the back of enterprise and hyperscaler demand; the U.K. showed improvement; Germany picked up in the second half with public sector activity strengthening; and France remained the weakest geography.
Services revenue growth was described as modest overall. Within services, Professional Services displayed relative strength while Managed Services was softer, partially offsetting gains elsewhere.
AgreeYa acquisition and backlog
Stifel retained a constructive stance on Computacenter’s acquisition of AgreeYa, calling it strategically important for enhancing services capabilities in North America and noting the deal was made at a reasonable valuation. The acquired business is expected to contribute roughly $120 million in revenue in 2025 with adjusted EBITDA of about $14 million.
Beyond the acquisition, Stifel highlighted record product order backlog levels exiting 2025 across all regions. The firm said this backlog underpins expectations for ongoing organic progress and leaves room for further upgrades to earnings during the year.
Valuation as the constraint
Despite the improving operational outlook, Stifel argued valuation is now the primary constraint on the shares. The broker estimates the stock trades at about 19.4x fiscal 2025 earnings, a multiple that falls markedly when the company’s approximately £600 million cash position is excluded.
Stifel’s price target is derived from a multiple of 16x fiscal 2026 ex-cash earnings and implies roughly 7% upside from current levels, a gap the broker believes is consistent with a neutral Hold recommendation rather than a Buy.
Bottom line
Stifel’s note balances clear operational momentum at Computacenter - evidenced by strong GII growth, a sizable backlog and the strategic AgreeYa acquisition - against a valuation that the broker sees as limiting potential returns for investors. The combination of those factors prompted the move from Buy to Hold.
Key points
- Stifel downgraded Computacenter to Hold from Buy and raised its price target to 3,584p from 3,000p.
- Gross invoiced income rose 32% in fiscal 2025, with Technology Sourcing a primary driver; gross profit is expected to grow 8.3%.
- The AgreeYa acquisition is viewed positively, with expected 2025 revenue of around $120 million and adjusted EBITDA near $14 million; a record product order backlog was reported exiting 2025.
Risks and uncertainties
- Valuation risk - the shares trade at about 19.4x FY25 earnings, limiting upside unless earnings rerate or grow faster than currently anticipated. This affects equity investors in technology and IT services sectors.
- Services performance variability - softer Managed Services growth partially offset Professional Services strength, introducing execution risk to revenue mix and margin trends in the services segment.
- Regional demand differences - uneven geographic performance, with France weaker than other markets, could constrain consolidated momentum if regional headwinds persist. This impacts multinational IT services exposure.