The new Conservative government has put a date in the diary for its first Budget announcement: 11 March 2020. For now, analysts at Jefferies reckon that the Tory party’s election manifesto – and recent comments from the Treasury Secretary – “suggest government discretionary spending is likely to see further growth” this year. That would, in turn, arguably support growth in information technology (IT) spending.
That’s ostensibly good news for Softcat (SCT) – a seller of IT infrastructure technology and services. Jefferies believes the group is “well-positioned” to capture any such increases in spending, because of its work to expand its public-sector business (an area that constituted 35 per cent of the group’s total gross invoiced income (GII) over the year to July 2019).
More government investment in IT could, presumably, also bode well for peer Computacenter (CCC). In any case, both companies have seen stellar share price momentum over the past 12 months – up by more than 80 per cent and 70 per cent, respectively. Little wonder, perhaps, given that both have also delivered strong performances.