J.P. Morgan has launched equity coverage on Bytes Technology Group and Bechtle, assigning an Underweight rating to Bytes and a neutral stance to Bechtle. The broker highlighted limited upside from artificial‑intelligence infrastructure for both firms, contrasting them with peers such as Computacenter, which J.P. Morgan continues to name as its most preferred value‑added‑reseller in Europe.
For Bytes, the bank set a price target of 375 pence for December 2027, implying roughly a 10 % downside from the current share price. The rating reflects the company's modest hardware footprint—hardware contributes less than 10 % of gross profit and about 3 % of invoiced revenue for fiscal 2026. Microsoft accounts for about half of Bytes’ group gross profit, and recent changes to Microsoft’s channel incentives, which now favour net‑new seat growth over renewals, could curb Bytes’ near‑term profit expansion. Operating profit as a share of gross profit fell to 37.5 % in fiscal 2026 from 40.7 % in fiscal 2025, a decline of roughly 320 basis points. J.P. Morgan projects Bytes’ gross and operating profit to lag consensus by about 2 % through fiscal 2027‑2029.
Bechtle received a neutral rating with a December 2027 price target of €38, suggesting modest upside. The German IT services firm’s shares have slipped 17 % year‑to‑date, while its forward price‑to‑earnings ratio stands near 18 ×, about one standard deviation below its ten‑year average of 22 ×. Approximately half of Bechtle’s revenue derives from small and medium‑sized business customers, with only around 10 % from large enterprises. The broker expects pretax profit to rise about 9 % year‑over‑year in fiscal 2026, within management’s guidance range of 5‑10 %.
Peer performance underscores the contrast: Computacenter is up 82 % year‑to‑date, Softcat up 43 %, while Bytes has risen 16 % despite a 20 % single‑day drop after February 2024 disclosures concerning unauthorized share transactions. J.P. Morgan’s analysis also notes that Bechtle’s upcoming September capital‑markets day could provide further insight into its growth trajectory.
Overall, the coverage emphasizes that both Bytes and Bechtle face constrained exposure to the AI‑driven spending surge that is benefitting peers with larger hyperscale customer bases. The ratings and targets reflect J.P. Morgan’s view that the near‑term upside for these firms remains limited.
