Bytes Technology shares soared on Tuesday as the computer software reseller beat annual profit expectations, buoyed by an incentive plan with key supplier Microsoft.
Surrey-based Bytes, which is the UK’s biggest reseller of Microsoft tools, told investors it saw gross invoiced income – a key financial metric – ‘comfortably exceed’ £2billion for the first time in the 12 months to 28 February.
Bytes partially credited the ‘strong’ performance to two full months of trading under a recently updated Microsoft incentive plan, which has been ’embedded into [its] strategic growth plans’.
Analysts also pointed to the growth of Microsoft’s Copilot AI tool as a key opportunity for the firm.
Businesses tend buy software through agents such as Bytes, as they offer lower prices, advice and support when things go awry.
The group posted gross profit growth of 12 per cent for the year, ahead of market consensus of 9 per cent.
‘Bytes is geared to Microsoft’s Copilot success in what is a massive structural growth opportunity,’ Shore Capital analyst Martin O’Sullivan said
Boss Sam Mudd said the result demonstrates ‘the positive trajectory of our business which benefits from an ever-evolving industry’.
She added: ‘BTG remains at the forefront of IT delivery, and we are highly engaged in areas such as AI adoption, cloud services and cybersecurity, which continue to be strong industry drivers.
‘Our strategy is underpinned by our strong vendor relationships and the commercial acumen and dedication of our people, which means we are primed to capture the significant growth opportunities ahead and drive continued success.’
Bytes shares soared 18.2 per cent to 489.8p by late morning on Tuesday, paring 12-month losses to 6.3 per cent per cent.
Shares have struggled for momentum since the resignation of then-chief executive Neil Murphy in spring last year after he was accused of buying stock without notifying the group’s board.
They remain well below at January 2024 all-time-high of 657p.
Bytes, whose customers range from the police, fire service and local authorities to Harvey Nichols, Trainline and Findus food group, floated on the London Stock Exchange in December 2020 with shares priced at 270p.
Martin O’Sullivan, equity research analyst for technology at Shore Capital, highlighted Microsoft’s most recent earnings report that showed better-than-expected adoption of the tech giant’s AI-driven Copilot tool.
‘Bytes is geared to Microsoft’s Copilot success in what is a massive structural growth opportunity,’ he said.
With ‘several possible avenues for upside from new customer acquisition, greater share of wallet, a growing impact from AI, potential buybacks and other factors’, Shore Capital holds a buy rating on Bytes shares and a ‘fair value’ target price of 590p.
Peel Hunt analysts are more bullish with a buy rating and a target price of 638p.
The broker said in a note that Bytes shares trade at an ‘unwarranted’ discount that ‘should be taken advantage of’.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .