BofA Securities has moved to a more positive view on European IT services, pointing to data that suggest the segment may be stabilising after two straight years of contraction. The brokerage noted its proprietary sector indicator has increased for the eighth month in a row when viewed on a six-month moving average basis, and it expects a gradual recovery in top-line growth through 2026.
Within its preferred list, BofA highlights four companies where it sees differentiated upside driven by client behaviour, strategic shifts and exposure to more resilient end markets.
Capgemini is BofA’s lead large-cap pick, rated "buy" with a price objective of €145. The firm expects Capgemini to benefit as European customers accelerate offshoring in response to tighter budgets. BofA also flagged that effective monetisation of generative AI offerings could supply an additional boost. Capgemini shares trade at €107.80, implying roughly 35% upside to the broker’s target.
Netcompany also carries a "buy" recommendation and a DKK 336 price target. BofA said a March fireside chat with Netcompany’s CEO left it encouraged by the company’s product- and platform-led delivery model and its vertical specialisation. The brokerage believes these attributes position Netcompany well as the industry evolves toward agentic AI and outcome-based pricing. Netcompany’s shares trade at DKK 327.
Sopra Steria is rated "buy" with a €173 target, versus a current share price of €126.90, offering over 36% potential upside to BofA’s objective. The broker cites improving organic growth momentum and sees room for faster margin improvement following Sopra Steria’s disposal of its Banking Software division in 2024, leaving IT services as the clearer core of the business.
Kainos completes BofA’s preferred list with a "buy" rating and a 1,290p price target. BofA values Kainos’ deep exposure to the public sector, which it views as a source of more resilient revenue through macro downturns because of the multi-year nature of government contracts. The broker also points to Kainos’ digital services capabilities as a durable competitive advantage as clients demand higher output against constrained budgets.
BofA’s commentary frames the sector outlook around two broad dynamics: client budget pressure prompting shifts such as accelerated offshoring, and the potential for AI-related monetisation to add a new revenue stream. The brokerage’s recommended names reflect a mix of scale, product-led delivery, cleaned-up portfolio focus and public-sector exposure that it believes will fare better as the market transitions.
Note: This article presents BofA Securities’ published views and company-specific price objectives and current share levels cited by the broker. It does not add new performance figures or forecasts beyond those reported by BofA.