IT firms valuations on the rise on back of strong Q4

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IT firms valuations on the rise on back of strong Q4

Simon Quicke

The value of the IT sector continues to recover from the low point of the recession with technology companies benefiting from an upswing in share prices.

Despite the on-going recession the top UK firms outside the FTSE 100 have seen their valuations peak in the last quarter last year at a level not far off the glory days of Q4 2007.

According to Grant Thornton UK LLP one of the main contributing factors to the recovery is a recognition by investors that the tech sector has the ability to grow quickly.

"The capacity for technology companies to generate considerable capital growth over a short period of time has made the sector an attractive prospect for investors," said Niki Dixon, head of technology at Grant Thornton.

"The significant level of merger and acquisition activity has also contributed to the strong performance as larger players seek out niche acquisitions," Dixon added.

One of the highlights was Micro Focus, which saw its share price increase by 30% in Q4, but there were cases of companies experiencing similar reverses indicating the market is not uniformly gaining ground,

"The worry is however, that as one of the hardest hit sectors when the market dropped, any further blows to the UK economy could reverse the current rally in share prices and once again we may see technology shares at the forefront of stocks being sold," added Dixon.

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