Computacenter shares rise on strong U.K., U.S. growth and upbeat 2025 outlook

Computacenter's stock rose following the company's decision to raise its full-year adjusted EBIT forecast, driven by robust growth in North America and the U.K. Despite ongoing challenges and subdued public sector activity in Germany and France, the IT firm now expects adjusted EBIT to slightly surpass last year's £81 million. While full-year profit before tax (PBT) guidance remains near last year's £254 million, it represents a modest reduction from earlier analyst expectations, yet the overall outlook remains positive due to strong performance in key markets.

Analysis

Computacenter (LON:CCC) has presented a mixed but net-positive update, driven by a sharp divergence in its geographic performance. The company's stock rose after it upgraded its full-year adjusted EBIT forecast to be slightly ahead of the prior year's £81 million, a move prompted by stronger-than-expected growth in North America and the U.K. This outperformance, particularly in the Technology Sourcing segment, is currently masking significant headwinds in continental Europe. Specifically, Computacenter cited ongoing weakness in Germany and France due to subdued public sector activity and delayed deals. This regional softness has led to a revision in profit before tax (PBT) expectations; while the company anticipates PBT will remain near last year's £254 million, this is below the prior analyst consensus of £265 million. The outlook for a recovery is also uneven, with an expected rebound in German public sector activity in the second half of the year, while the French market is projected to remain challenging.

Key Decisions for Investors

• Investors should weigh the positive momentum from the upgraded EBIT guidance against the effective PBT downgrade relative to consensus, as this may temper future earnings expectations.
• The anticipated second-half recovery in Germany's public sector represents a key catalyst for achieving full-year targets, and any further delays in this market should be monitored as a primary risk factor.
• Given the company's increased reliance on Anglo-American markets, it is prudent to assess the sustainability of growth in these regions, as they are now critical to offsetting the persistent weakness in France.