Softcat was under the cosh on Thursday as Jefferies cut the stock to 'hold' from 'buy' following recent share price strength.
The bank noted the shares are up 37% year-to-date versus a flat FTSE 250 and 62% in the past 12 months, versus a 5% gain for the FTSE 250, making the valuation less attractive.

In addition, it said that while there is scope for the company to exceed its FY18 estimates, the continued share price strength suggests that a positive surprise is factored into investor expectations.

Jefferies pointed out that Softcat now trades at a 60% to 70% premium to global peers in CY19. "This premium valuation points to a less attractive risk-reward and underpins our change in recommendation," it said.

The bank also said that while its initiation note back in October 2017 suggested that Softcat could potentially deliver 15% total shareholder return on a five-year view, it now reckons the likely TSR is less than 10%.

Nevertheless, it said Softcat remains a high-quality business which should perform "robustly", and upped its price target to 690p from 600p.

Jefferies also commented on the CEO change at the company, with Graeme Watt taking over in April.

"Given Softcat's well established operating model and strategy, we expect the CEO transition to be relatively smooth," it said.

At 1323 BST, the shares were down 4.9% to 665p.

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