Citi downgrades Softcat to 'neutral' from 'buy'

(Sharecast News) - Citi downgraded Softcat to 'neutral' from 'buy' on Monday and lifted the price target to 1,950p from 1,550p as it argued that "even the best house in the neighbourhood has a price". The bank said Softcat has continued to demonstrate disciplined execution and has benefitted from the structural pick-up in enterprise IT investments.

"Looking ahead, the group is well positioned to sustain superior growth through clients' accelerated investment in the infrastructure layer towards being AI ready," it said. However, following the re-rating since the first-half results - the shares are up more than 50% since mid-March - Citi sees the positive view reflected in the stock valuation.

"With higher base comp as well as possible headwinds from macro and supply constraints, we see limited scope of meaningful growth surprise and further stock re-rating," it said.

At 1347 BST, the shares were down 0.8% at 1,786.47p.