Numis upgrades Bytes Technology, notes 'strong rebound' in 2H cash conversion

Adjusted earnings before interest and taxes were seen growing by roughly 20% or two percentage points quicker than Numis had estimated.

In particular, the analysts noted the "strong rebound" in cash conversion, which saw Bytes end the second half with approximately £73m of cash on hand an no debt (Numis: £60.7m).

"At a time when investors are sensitive to changes in the demand landscape, it is reassuring to see the group continue to see healthy demand levels across both private and public companies," they said in a research note sent to clients.

"At 375p, the shares are trading on Feb'24 EV/NOPAT of 18.3x, supported by a 4% FCF yield, which we believe is attractive given its growth."

Numis kept its target price for the shares at 500.0p.