Jefferies has upgraded Bytes Technology Group PLC (LSE:BYIT, JSE:BYI) to 'buy', describing the company as “down, but not out.”
Despite a weak update at its recent annual meeting showing slower growth, Jefferies believes this slowdown is only temporary.
The company’s strong relationship with Microsoft, which generates about half of its gross profit, should support a future recovery.
Shares have fallen around 36% after analysts cut earnings forecasts by 8-11%.
This decline means the stock is now valued as if it has no growth prospects, creating an attractive risk-reward opportunity for investors willing to bet on a rebound, the Jefferies note said.
The American bank sees the current share price as a chance to buy Bytes at a discount, anticipating that the company’s fundamentals and Microsoft partnership will drive growth again in time.
The shares were up 2.7% at 338.9p.