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Softcat purrs over strong trading performance

IT reseller has now upgraded expectations three times during its fiscal year
it hardware
Top cat: Softcat is feline good after seeing growth across all business segments

Softcat PLC (LON:SCT) said it was confident that its full-year results will now be even further ahead of recently-upgraded expectations.

The FTSE 250-listed IT reseller said it had delivered “strong” year-on-year growth “across all income and profit measures” for its third quarter to 30 April, leading it to foresee numbers that will be “slightly ahead” of the latest forecasts.

READ: Softcat surges as strong first half leads to upgraded full year forecasts

This upgrade follows one in March where the Marlow-based company posted a strong set of half-year results and said it expected results for the 12 months to end-July to be “marginally ahead” of previous predictions.

In December it had bumped up expectations from December’s statement that it was “materially ahead” of the start of the year, where it had warned that “exceptional market conditions” would make it difficult to keep up the pace of growth.

Softcat said the drivers for its recent performance were broad-based, with growth across technology areas and customer segments.

With offices in London, Bristol, Leeds, Glasgow and Fareham, a new office in Birmingham is likely to open soon after July.

House brokers bullish

House broker Credit Suisse upgraded both its full year revenue and EPS forecasts by 3% after the update, with new numbers indicating 18% growth in gross profit and an assumption that this growth in FY20 will be around 8%.

"The fact that growth is broad-based suggests that strong momentum should be sustainable. It is always hard to disaggregate cyclical from structural growth, but the technology/ infrastructure that supports today's digital imperatives seems less discretionary than it ever has, providing some longevity to the current cycle."

Joint house broker Jefferies felt that ten consecutive quarters of strong growth against an increasingly tougher comparable, suggested Softcat's investments in expanding the business via headcount and services are paying off.

"Looking ahead, we believe these investments will enable Softcat to continue growing wallet share among its client base. Indeed, the company's wallet share outside of its top 100 customers is currently limited."

Shares in Softcat were up 2.5% to 963.5p on Monday afternoon. 

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