JP Morgan has come out in favour of Softcat's $1.05 billion swoop on US group GDT, reckoning investors will give management the benefit of the doubt.
Analyst Joseph George, who rates the FTSE 250 IT infrastructure provider 'overweight', said the bank leaned positive on the deal after sounding out investors.
GDT, a Dallas-based IT solutions provider, will give Softcat a substantial foothold in North America.
Softcat expects the deal to lift earnings per share (EPS) by a high single-digit to low double-digit percentage in its first full financial year after closing.
George thinks that is plausible, pencilling in roughly 10% accretion for the 2028 financial year in his base case.
In a bull case, with upside to both Softcat's own business and GDT, he sees potential for around 17% upside to organic 2028 EPS.
The sticking point, according to JP Morgan, is GDT's earnings trajectory.
There are plenty of moving parts, including how revenue from multi-year contracts is recognised, the switch from US accounting rules to Softcat's more conservative international standards, and the treatment of deferred tax assets.
Still, Softcat has a habit of beating its own guidance, which should buy it some goodwill, George argued.
Separately, the broker lifted its organic earnings before interest and tax (EBIT) forecasts for the 2027 and 2028 financial years by 6% to 7%.
That reflects a stronger-than-expected finish to the year to July 2026 and the guidance issued for the current year.
Softcat raised £354 million last week to help fund the purchase.
