LONDON (dpa-AFX) - The British investment bank Barclays expects Bechtle's profits to stagnate at best in the current year. 2024 is likely to be challenging for the IT service provider from Neckarsulm, wrote analyst Orson Rout, and in a study published on Monday he rated the share as "Underweight" with a price target of 40 euros. "The fact that profits remained stable in 2023 was due to unusually high 'other income' and this is likely to reverse in 2024," he expects.

The expert sees structural burdens above all in the e-commerce division. He points out that this division is purely a retail business in which customers are unlikely to ever make use of more complex services. Accordingly, margin growth is limited here, as the margins for services could be twice as high as the product margins. He also expects increasing competition from the retail giant Amazon.

The Barclays analyst also sees problems for the small and medium-sized enterprise (SME) segment and the IT group's hardware business. Although these problems tend to be short-term, they are also partly structural. The uncertainty in the first half of the year is likely to grow against the backdrop of the economic situation and therefore probably increasing insolvencies, he wrote. Hardware-exposed IT providers such as Bechtle are therefore likely to face several difficult quarters. Structurally, Rout points to the still prevailing headwind from supplier risk. This is a further short-term disadvantage, as Bechtle is very strongly involved in the PC sub-segment.

Without the strong growth in 'other operating income' in the first nine months of 2023, Bechtle would probably have had difficulties achieving its margin targets for the year as a whole, according to the analyst. Since periods of strong expansion in this area were followed by periods of strong declines, this is also likely to be the case in 2024, Rout predicts.

He also expects depreciation and amortization to be higher than the average expected by analysts. "Capital expenditure has doubled in recent years, with the associated amortization and depreciation lagging years behind," he explains and also anticipates burdens from this side in the coming years. He therefore does not see any profit growth this year.

In line with the "Underweight" rating, Barclays Capital expects the share to underperform the other stocks in the sector under review over the next twelve months./ck/bek/he

Analyzing institute Barclays Capital.

Publication of the original study: 16.02.2024 / 17:31 / GMT First dissemination of the original study: 19.02.2024 / 04:00 / GMT