Software reseller and IT advisor Softcat (SCT) was the biggest gainer across the whole FTSE All-Share universe on Tuesday after handing investors another positive take on trading.

The FTSE 250 company said business had ‘continued to be positive’ since its first quarter statement in November, driven by continued strong demand from its public sector customers.

While the second half remains difficult to forecast, management noted that the company is ‘significantly ahead of where we expected to be at this stage’, also noting ongoing improvement from commercial customers.


That upbeat tone was jumped on by investors desperate for news to lift the spirits as the UK descends into lockdown 3.0. Shares in Softcat rallied more than 9% on Tuesday morning, hitting an all-time high of £15.29.

We discussed the Softcat investment story in November, when the stock was changing hands at £11.53, having previously written about the shares at 959.5p in August 2019.

The firm's statement ahead of its interim results for the six months to 31 January 2021 said the corporate picture has continued to improve but is also somewhat mixed, with some customers pursuing large projects and others taking a more cautious approach.


That may see some analysts continue to err on the cautious side when they come to recalculate full year forecasts, but Peel Hunt number crunchers have chosen to take a bolder approach

‘Despite accelerated investments, it’s now very likely Softcat will deliver double-digit profit growth for full year 2021, versus our 2% initial estimate’, said Peel Hunt’s James Lockyer.

‘We upgrade our forecasts accordingly, which drives a 10% upgrade to our target price’, he said. Peel Hunt’s share price target moved from £14 to £15.95.

Ongoing investment in its multinational and technical capabilities, which continued throughout 2020 despite the challenges of Covid-19, has enabled it to play an important role in large projects with both corporate and public sector customers.

Softcat will report its half year results to the end of January on 24 March.

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Issue Date: 05 Jan 2021