Berenberg bumps up Softcat target price following Q3 update

(Sharecast News) - Analysts at Berenberg raised their target price on software firm Softcat from 1,900p to 1,950p on Tuesday, following the group's third quarter trading update last week.

Berenberg said Softcat had delivered "strong double-digit year-on-year growth" in both gross profits and underlying operating profits in Q3, something it said was "particularly impressive" given its "excellent H225 performance", in which the company delivered gross profit growth of 24% and underlying operating profit growth of 22%.

The German bank noted that Softcat had also upgraded its FY26 underlying operating profit guidance to "mid-teens year-on-year growth", up from the high-single-digit growth guided to in its interim results, which itself was an upgrade from the firm's initial low-single-digit guidance.

"While the share price has increased by c40% since Softcat's H126 results in March, we think 19.3x FY26 P/E (ex-cash) looks cheap relative to our expectation of an 11% FY25-28 EPS CAGR, cash conversion of at least 90% and a strong track record of beating even its upgraded guidance," said Berenberg, which reiterated its 'buy' rating on the stock.

"We upgrade our forecasts for gross profit by 4% in each of FY26, FY27 and FY28, and for underlying operating profit by 6% in each of FY26, FY27 and FY28. This brings our FY26 underlying operating profit forecast in line with the upgraded guidance."

Berenberg also noted that Softcat has "a strong record of beating even its upgraded guidance", as was the case in FY25.

Reporting by Iain Gilbert at Sharecast.com

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