Barclays initiated coverage of Bytes Technology – a valued-added reseller of IT products and services – at ‘overweight’ with a 640p price target.
“We think Bytes ticks all the boxes for quality-focused investors but recognise that alone may not be enough with a 27x FY23E price-to-earnings against the current backdrop,” it said.
“We note, however, that it is also defensive in two relevant ways: 1) against wage inflation/talent wars; and 2) against economic uncertainty.”
Barclays said high employee retention, a strategy of developing junior talent, and compensation linked to profit support the former, while a track record of M&A in times of uncertainty and resilient organic growth support the latter.
“We expect continued momentum at the FY trading update in mid-March and are 3% ahead of FY23E Bloomberg consensus.”
At 1125 GMT, the shares were up 2.6% at 472p.
