Upgrading UXC

After a strong run, several new contracts show the IT services company is still moving in the right direction.

In recent months, new contract wins have resulted in significant share price growth for many companies in the IT services sector. After a number of years of under-spending it appears the cyclical component of IT is finally picking up. There is also a structural shift in IT towards more cloud-based applications and new IT technology, replacing the former labour for hire consulting model. Since the GFC a number of Australia’s largest corporations and state/federal governments have cut their IT budgets, but there comes a time when old systems need to be replaced.

Confirmed earnings guidance and new contract wins have seen the UXC share price grow from $0.735 to $1.03 since the start of July. Although we have had a Buy recommendation with a $1.10 valuation, we didn’t include the stock in the model portfolio.

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