Barclays sees challenging 2024 for Bechtle, starts with 'underweight'

Bechtle AG

19/02/2024 10:29

** Barclays starts Bechtle  BC8G.DE  with an "underweight"
rating, saying it does not see the German IT provider growing
its profit this year
    ** The brokerage says that Bechtle's PC exposure and the
E​-​Com division are a structural drag, while the hardware
backdrop is also a short​-​term challenge
    ** Barclays says the company's E-Com division is a pure
trading business with customers who do not require complex
services, therefore, it sees this as a cap on Bechtle's margin,
since services margins can be double product margins
    ** It sees a tail risk of increasing competition from Amazon
in the outer years as Amazon is already cheaper across the
majority of products that have been analysed by the broker
    ** Profit resilience last year was driven by unusually high
other income, which Barclays expects to reverse in 2024, it
writes
    ** With insolvencies expected to tick up further into 2024,
Bechtle's exposure to small and medium-sized companies is at
risk of further impact from adverse macroeconomic factors and
creates uncertainty into H1, Barclays says
    ** Barclays says it is 10% below consensus on EBIT estimates
for 2024 as it expects other operating income to decline this
year, after it jumped 69% in the first nine months of 2023
helping Bechtle's margins, and sees higher depreciation and
amortization costs over the next few years
    ** Out of 17 analysts that cover Bechtle, 11 rate the stock
"strong buy" or "buy,"​ four rate it "hold" and two rate the
stock "sell" - LSEG

 (Reporting by Mateusz Dobrzyniewski)
 ((Mateusz.dobrzyniewski@thomsonreuters.com))