Interim results from Softcat PLC received a warm welcome from investors and analysts, as the IT infrastructure group reported a 10.4% increase in operating profit and upgraded full-year guidance.
Analysts at Stifel noted that the results were a "beat-across-the-board", with gross profit and operating profit 1% and 2% ahead of expectations, while revenues were 6% ahead, driven by hardware sales up 19% in "some early signs of momentum in end-user devices".
Analyst Martin O’Sullivan at Shore Capital noted that shares in the FTSE 250-listed company have tracked the FTSE All Share over the past three months, "balancing optimism about the company’s growth potential with caution over near-term performance amid the UK's ongoing GDP headwinds".
He said the interim results and outlook "overall reinforce our confidence in the company’s well-established, market-leading business model, which benefits from a diversified approach and strong execution".
Damindu Jayaweera at Peel Hunt says: "Softcat remains the best UK play on potential recovery in hardware spend over the next cycle, with no recovery expectation built in to FY25 guidance.
"Given the Windows refresh is taking place in October (free Windows 10 support is being discontinued), early movers would create further upside. The company mentioned both cyber security and AI adoption as structural tailwinds."
O'Sullivan said Softcat is capitalising on growth opportunities across both the public and commercial sectors, driven by increasing demand for IT infrastructure, cloud solutions, and digital transformation services.
"Its ability to navigate industry challenges while expanding market share further underscores the resilience and scalability of its business strategy.
"The need for IT systems to stay current, supported and secure has become essential, not optional, across cybersecurity, cloud adoption, digital transformation, hybrid data centers, remote working solutions and, increasingly, AI.
"This strong foundation paves the way for further positive developments and expansion even if GDP growth remains in the doldrums."
Stifel, which has a 'buy' rating on the shares, said they currently trade at 23.9 times full-year earnings and 21.3 times 2026 EPS, versus a peer group at 17.2 times and 15.0 times, with the wider European IT Services at 13.4 times and 12.1 times.