Softcat’s Reliance on Unpredictable Deals Challenges Future Valuation

Jefferies analyst Charles Brennan maintained a Sell rating on Softcat today and set a price target of p1,385.00.

Charles Brennan’s rating is based on the observation that Softcat’s recent financial performance has been heavily reliant on large, unpredictable deals. While the company has reported a slightly better than expected outcome for FY25, this improvement is primarily due to these significant transactions, which complicates future projections for FY26.
Brennan notes that if these large deals are excluded from forecasts, it suggests modest downgrades in expected growth. This reliance on hard-to-predict deals is seen as a challenge for maintaining a premium valuation multiple. Consequently, if Softcat is treated as a high single-digit growth company, in line with its guidance, justifying its current valuation becomes difficult.