Stifel has upgraded its recommendation on Computacenter Plc from "hold" to "buy" and boosted its price target to 5,235 pence from 3,584 pence, pointing to stronger earnings prospects and an unusually large order backlog connected to datacenter construction activity.
The broker set the new target at 20 times FY27 ex-cash earnings per share, which implies roughly 17.5% upside from the July 10 closing price of 4,454 pence for the UK technology infrastructure provider.
Stifel noted that earlier concerns about revenue rising faster than earnings because of a lower-margin mix appear to be easing. "While we had previously been concerned about earnings growth not following the rise in revenue due to lower margin mix, this seems to be improving with some help from acquisitions," the broker said.
On the numbers, Stifel now expects adjusted EPS growth of 26% for FY26, a significant revision from a 6% growth forecast issued six months ago when the firm downgraded the stock to hold on the basis of a 19.4 times FY25 EPS valuation and weak earnings momentum. Adjusted EPS is projected at 221.2 pence for FY26, rising to 230 pence in FY27.
The broker lifted its adjusted profit-before-tax estimates by 16% for FY26 and by 13% for FY27, forecasting adjusted PBT of £336.2 million for FY26 and 350.3 million for FY27.
Revenue is expected to climb to £11.71 billion in FY26, a 27.4% increase, before remaining roughly flat at £11.70 billion in FY27.
Stifel highlighted a substantial jump in the committed product order backlog, which rose 200% year-on-year to £7.12 billion at the end of H2 2025. The increase was concentrated in North America, where the backlog climbed 232% to £5.04 billion, while the UK backlog expanded 226% to £1.39 billion. The broker said the backlog "has risen to a new record level and is not simply being worked down."
On the company's profit mix, Stifel noted that the Services division generates roughly 40% of profit and is also benefiting from datacenter construction. The Services offering was recently bolstered by the acquisition of Agreeya, which was completed in January 2026.
Valuation metrics were also cited. The shares trade at an ex-cash price-to-earnings ratio of 17.8 times versus UK value-added resellers on 18 to 23 times. Stifel reiterated that its price target "equates to shares 20x FY27E ex-cash EPS."
The broker flagged a potential sensitivity in the stock's outlook, saying shares "could be vulnerable to AI sentiment shifts," but also observed that datacenter build activity "remains high." Stifel noted the company holds about 300 million in cash for potential further acquisitions.
Investors should note that H1 2026 results are scheduled for release on September 8.
Key points
- Stifel upgraded Computacenter to "buy" from "hold" and raised the price target to 5,235 pence, implying about 17.5% upside from the July 10 close of 4,454 pence.
- Analysts boosted adjusted EPS and profit-before-tax forecasts: adjusted EPS of 221.2 pence for FY26 and 230 pence for FY27; adjusted PBT of £336.2 million for FY26 and £350.3 million for FY27.
- The committed product order backlog reached a record £7.12 billion at the end of H2 2025, driven mainly by North America and the UK, reflecting strong datacenter construction activity.
Risks and uncertainties
- Shares could be sensitive to shifts in AI-related investor sentiment, a risk explicitly noted by Stifel - this could affect technology and infrastructure market positioning.
- Although the backlog has risen to record levels, its concentration in North America and the UK creates geographic exposure that could influence performance in those regional technology markets.
- Valuation comparisons show the stock trades at an ex-cash P/E of 17.8 times versus peers at 18-23 times, indicating relative valuation risk versus UK value-added resellers.