In a report released yesterday, Adam Wood from Morgan Stanley maintained a Hold rating on Softcat, with a price target of p1,595.00.
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Adam Wood has given his Hold rating due to a combination of factors related to Softcat’s recent performance and future projections. The company has shown strong growth in FY25, with expectations of high teens percentage growth in gross profit and mid teens in operating profit, surpassing previous forecasts. However, the outlook for FY26 is less optimistic, with anticipated growth in gross profit and operating profit being significantly lower, especially when excluding the impact of large deals from FY25.
Despite the strong performance in FY25, the projected slowdown in growth for FY26 suggests a more cautious approach. The anticipated high single-digit growth in gross profit and low single-digit growth in operating profit for FY26 indicates a potential reduction in consensus forecasts. This mixed outlook, with strong current performance but tempered future expectations, supports the Hold rating as investors may need to weigh the immediate gains against the potential for slower growth ahead.
SCT’s price has also changed slightly for the past six months – from p1508.000 to p1624.000, which is a 7.69% increase.