By the middle of April, many UK small- and mid-cap tech stocks looked like they’d been through the wringer.
A challenging start to 2025 has left even high-quality names trading at sharp discounts. But analysts at Berenberg think the sell-off is overdone.
And for investors willing to take a closer look, there may be value hiding in plain sight.
A bruising start for tech
While the FTSE 100 is up modestly year-to-date, UK mid-cap TMT stocks under Berenberg’s coverage are down an average of 15%.
That’s despite only minimal changes to earnings forecasts and limited first-order exposure to global trade tensions.
For the German bank, this disconnect between fundamentals and market pricing has opened a window to pick up quality growth names on the cheap.
Across their top picks, they’ve seen earnings resilience paired with derated valuations.
For instance, Trustpilot Group PLC (LSE:TRST) shares are down nearly 40% this year, yet full-year earnings forecasts have been revised up.
That mismatch, Berenberg argues, makes the shares compelling at just 3.9 times 2025 enterprise value-to-sales.
Revisiting the favourites
Some of the firm’s most favoured names include Wise PLC (LSE:WISE), Trainline PLC (LSE:TRN), GlobalData PLC (AIM:DATA) and Bloomsbury Publishing PLC (LSE:BMY).
Each offers exposure to distinctive structural trends, from fintech disruption to digital ticketing and AI-powered data subscriptions.
Wise, for example, is still growing rapidly in a difficult macro environment, with a firm grip on market share in cross-border transfers. Yet the shares trade on less than 24 times 2025 earnings, a far cry from peak fintech multiples.
Bloomsbury, meanwhile, is riding the global publishing wave, particularly through the enduring appeal of author Sarah J. Maas.
Despite that, the stock trades at a discount to its historical average and offers strong free cash flow yields.
Trainline is benefiting from the shift to digital in rail bookings, especially in continental Europe.
And GlobalData, a subscription-led analytics business, is seeing early signs of success in an ambitious revenue transformation strategy.
Who's out?
Berenberg has taken the knife to Auction Technology Group PLC (LSE:ATG), a strong performer this year but now, in their view, looking pricey at nearly 20 times forward earnings.
With better value elsewhere, they’ve rotated the name out of their top picks.
Outlook: value with a safety net?
Berenberg’s broader house view is that UK equities may surprise on the upside over the next 12 months, thanks to contained global risks and modest growth at home.
For investors looking for exposure to structural trends at valuation discounts, this could be the moment to look beneath the FTSE 100 surface.