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(Sharecast News) - Softcat slumped on Friday as JPMorgan Cazenove placed the shares on 'negative catalyst watch' ahead of FY25 results.
Having analysed the impact that large deals may have on Softcat's near-term financial profile, the bank said it concluded that consensus may not reflect the extent to which large deals have contributed to FY25 EBIT growth.
It said that with around 12% 'underlying' EBIT growth expected through FY26, expectations could be elevated, especially if large deal momentum slows.
These deals are lumpy and concentrated mostly in a single large customer, JPM said.
"Our discussions with investors also suggest to us that this risk is not reflected within buyside expectations to a material extent," the bank said.
"Softcat's elevated relative valuation would similarly indicate that expectations are high, given recent earnings upgrades.
"However, our analysis indicates that FY26 consensus could see downside of circa low mid-single digit percentage if one-off large deals that are in the FY25 base do not repeat through FY26."
JPM said it sees risk that the FY26 guidance could crystallise this downside.
At 0900 BST, the shares were down 4.7% at 1,595.6p.
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