Berenberg upgrades Computacenter to 'buy', highlights 'notoriously conservative guidance'
Analysts at Berenberg upgraded Computacenter to 'buy' on Monday, stating they'd previously slapped the group with a 'hold' rating "too early".
However, Berenberg reassessed its view after recent trading, saying it was now "much 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," said Berenberg.
The German broker also noted that heading into next year, structural tailwinds looked set to persist and early attempts at cross-selling between the US and European businesses were seemingly on track to improve.
"Computacenter trades at a significant discount to its peers and has the scope to outperform our numbers via numerous channels," said Berenberg, which also upped its target price on the firm's shares from 1,500.0p to 2,150.0p.
Berenberg also highlighted that the firm's guidance needed to "be taken with a pinch of salt" as it suggested only a 3% earnings per share compound annual growth rate - the same guidance that management gave three years ago, even though Computacenter has delivered a roughly 20% EPS CAGR since then.
"Guidance is therefore notoriously conservative. Our base case estimates reflect management’s expectations but, with structural growth ahead, an improving macroclimate in the company's UK and German markets, and the US business making major progress, we think there is upside to our numbers."