From Morningstar: 2025-01-22 07:47:36

The UK tech sector, while small in the Morningstar UK Index, has a big impact. Companies like Darktrace and Spirent are quickly taken private, hindering growth. Arm Holdings’ decision to list in New York over London disappointed many. Despite impressive growth potential, UK tech companies struggle to reach unicorn status.

Tineke Frikkee, manager of the Waverton UK Fund, favors Sage Group as a leading UK tech company. Sage’s success in the US market and adoption of cloud and AI technologies have driven growth. As Sage shares rally, analysts see potential for further margin improvement and growth in the future.

Charlotte Ryland of the CCLA CBF Church of England UK Equity fund praises Halma for its diverse acquisitions in high-return sectors like safety and healthcare. Halma’s strategy of acquiring niche businesses with high profitability has led to its success. With a strong market share and few competitors, Halma is poised for steady growth.

Kainos, another favorite of Ryland, helps companies integrate Workday software and provides digitizing services to the UK government. However, a slowdown in public sector revenue due to the snap election in 2024 has impacted the company’s growth. Despite challenges, Kainos sees opportunities in digitalization despite government budget constraints.

Experian, not traditionally classified as a tech stock, utilizes technology to expand its offerings in fraud detection. While considered an industrial company, Experian’s use of consumer data for fraud prevention highlights its tech-forward approach. Ryland sees potential for companies like Experian to leverage technology for growth and innovation. Morningstar analyst Rajic Bhatia highlights Experian’s use of data to improve financial product marketing. With a strong presence in the US, Experian is now focusing on emerging markets like Brazil. Growth in middle-class populations and regulatory changes are expected to drive long-term expansion. The authors do not own any mentioned securities.



Read more at Morningstar: 3 UK Technology Stocks Rated Fund Managers Are Backing