Financial analysts advise caution for UK IT sector


Financial analysts advise caution for UK IT sector

Will Garside

Market analysts at investment bank UBS Warburg have reduced price targets for companies in the IT services sector as part of a general re-assessment of over-ambitious forecasts made last year.

In a report evaluating the IT services sector for investors, the biggest markdowns were made on price targets for Dimension Data, Logica and Sema, which were all marked down substantially.

Will Wallis, a senior Analyst for UBS Warburg, said in a statement: "We have re-appraised price targets given our increased caution for 2001 growth."

"But we remain positive on the high quality companies within the IT sector," he added.

Dimension data suffered the largest percentage mark down with targets dropping 35 per cent, from 750p to 485p.

UBS Warburg analyst, Michael Briest said: "The large mark down on Dimension Data is more concerned with the slowdown in sales by Cisco of which they are a major distributor."

But Briest confirmed the market had over-ambitious expectations of performance in the IT sector last year.

Another victim of target price reduction was Logica, which has seen its target cut 500p to 1800p.

Logica group finance director Andrew Given said at an analyst briefing last November that European performance had been hit by the Euro.

Another UBS analyst said marking down so many UK companies was unusual, but it had also been expected because of the poor performance of technology stocks last year.

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