Barclays stays at 'overweight' on Softcat

Analysts at Barclays reiterated their 'overweight' recommendation and 1,260p target price for Softcat's shares, telling clients that the solid underpinnings of the business would drive a return to double-digits earings growth.

Soft demand from companies meant earnings growth had slowed down and was in turn weighing on the software specialist's ability to drive growth.

That posed a challenge particularly for Softcat, what with the company's shares already trading on 30 times' their estimated forward price-to-earnings multiple.

Nonetheless, its employees continued to be engaged and its clients satisfied, the broker said.

To back up that affirmation it pointed to its ranking - for a second year in a row - as the fifth best employer in the UK according to Glassdoor.

Investment continued to be substantial as well, with its headcount expected to increase by 10% over the full 2021 fiscal year.

"We remain confident that the business can return to double-digit earnings growth in a recovered market and that in the interim management has the balance sheet and profitability to continue investing in the business."