Broker snap: UBS downgrades Computacenter to 'neutral'

18th Oct 2013 10:14

IT infrastructure services firm Computacenter was trading in the red on Friday after UBS downgraded the stock from 'buy' to 'neutral'.While the bank said that the stock's valuation is not demanding, it believes the company is "navigating a tricky path in France and Germany's turnaround is at an early stage"."With July's capital return behind us, we see limited upside from current levels and move to a 'neutral' rating."UBS said that France is likely to be the main focus of the company's third-quarter trading update on October 23rd. "The SAP deployment in France pushed about £12m of revenues from Q2 to Q3, so a recovery in headline growth rates is likely, but the tone around trading (in Professional Services especially) and the achievability of the breakeven target for 2014 in France will be key to the shares' reaction we believe," the broker explained. The adjusted operating loss in France increased to €5.4m in the first half, compared with €0.9m the year before.On the group level, the bank said Computacenter could see a return to underlying growth in the third quarter following a 1.7% fall in constant-currency sales in the first half.The stock was down 3.96% at 546p in morning trade.BC