Berenberg raises target price on Computacenter

Berenberg said in this environment it was rare to find a company that delivers numbers higher than analysts had been forecasting at the beginning of the year and rarer still was one that trades on just a 19x price-to-earnings ratio and delivers a roughly 7% free cash flow yield.

"How Computacenter trades on a 30% discount to European resellers is beyond us," said the analysts.

The German bank, which reiterated its 'buy' rating on the stock, stated Computacenter was one of "the most compelling investment cases" in its universe and also highlighted that its earnings estimates may still be 20% too low.

"Feedback from channel checks indicates that the key to the company's outperformance is its distribution, logistics capabilities and customer mix," said Berenberg.

"With circa £280m of net cash, not only are we confident the company will reinstate its dividend but we also think that the likelihood of a cash return is rising."

In the analysts view, investors could generate a total shareholder return of around 45% over the course of 12 months, given its new price target, dividends and a possible tender offer.