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The Stocks with the Biggest Broker Upgrades


Data#3 held its 2023 Investor Day on November 16, without marking the announcement as price sensitive. Morgan Stanley analysts left the investor day with "greater conviction that mid-teens EPS is achievable versus low-teens consensus."
The key takeaways from the note include:

• Managed services contracts are margin dilutive in their first year due to the timing of revenue (straight line) and costs (weighted towards year one)
• Managed services margins expand as contracts mature from year 2
• Data#3's onboarding capacity reached full utilisation in 2022, limiting the number of new contracts. This constraint eased in the second half of 2023, leading to increased onboarding and a temporary hit to gross margins
• IT growth is forecast to accelerate from 5.8% in 2023 to 7.8% in 2024, where Data#3 have historically grown at 2-4 times system growth
• Data#3 is well positioned to capitalise on AI opportunities, including early access to Microsoft 365 Copilot and other initiatives

https://www.marketindex.com.au/asx/dtl/news