BofA sees European IT services 'riding the digitalization wave'
18/07/2022 14:57
** BofA Global Research estimates a 6% CAGR for the IT
services market over 2021-25, as it "rides the digitalization
wave," with increased companies and governments' spending on
digital transformation, cloud migration still at relatively
early states, and cybersecurity expected to move higher on
corporate priority lists
** "Companies are increasingly focusing on 'Intelligent
Industry' to digitize key industrial parts of their businesses,
which we believe will open up new budgets," BofA adds
** In a highly fragmented sector, BofA prefers companies
exposed to high-end services, like cloud or business
transformation and application management, to those with legacy
exposure like traditional data centres and managed services
businesses
** As such, it initiates coverage of France's Alten
LTEN.PA with "buy" and Finland's TietoEvry TIETO.HE at
"underperform"; it starts Britain's Kainos KNOS.L at
"neutral", seeing the robust growth as fairly priced in
** It keeps "buy" on Capgemini CAPP.PA and Netcompany
NETCG.CO , seeing opportunities in their high digital exposure
and cloud strategy, while staying "neutral" on Atos ATOS.PA
** It adds that in times of recession, clients might shift
spending from growth-oriented to cost-cutting initiatives, and
sees diversified IT services providers like Capgemini CAPP.PA
and Accenture ACN.F well positioned to help, providing a
reasonable degree of top-line protection
(Reporting by Elitsa Gadeva)
((elitsa.gadeva@thomsonreuters.com))