Information technology products reseller and service provider CDW is likely to outpace the growth of the U.S. IT market after its recent acquisition of Sirius Computer Solutions, a Wall Street analyst says. CDW stock dipped on Friday.
William Blair analyst Maggie Nolan late Thursday updated her estimates for CDW following the company's upbeat first-quarter earnings report. In a note to clients, she said CDW's acquisition of Sirius will give the company a slight boost in gross profit margin.
Nolan reiterated her outperform rating on CDW stock. On the stock market today, CDW stock sank 0.4% to 157.
"CDW's revenue growth is tied to U.S. IT spending growth, and we continue to believe CDW is well positioned to outperform that spending benchmark as IT spending shifts to address the future state of work and how businesses interact with customers," Nolan said.
Sirius Acquisition Provides New Capabilities
Lincolnshire, Ill.-based CDW provides multibrand IT solutions to business, government, education and health care customers in the U.S., U.K. and Canada.
"CDW has a well-diversified revenue base across several end-markets, which decreases the company's risk profile," Nolan said. However, the company isn't immune to the risks of a macroeconomic slowdown, she said.
CDW's $2.5 billion purchase of Sirius, completed Dec. 2, expands CDW's capabilities in key growth areas. Those areas include hybrid infrastructure, cloud services, data management and security.
CDW Stock On Tech Leaders List
CDW stock is on IBD's Tech Leaders list. It also ranks fourth out of 55 stocks in IBD's Computer-Tech Services industry group, according to IBD Stock Checkup. The tech services group ranks No. 38 out of 197 industry groups that IBD tracks.
Choosing highly rated stocks from leading industry groups in a confirmed stock market uptrend generally increases your chances of making profits in growth stocks.
CDW stock has an IBD Composite Rating of 93 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
