Guardian IT shares stage recovery

Guardian IT provides data recovery services for clients including major banks

Shares in computer troubleshooting firm Guardian IT have staged their own recovery, as bargain hunters snapped up the firm's battered stock.

Guardian IT shares, which halved in value on Thursday following a profits warning, regained 50p, or almost one quarter, on Friday.

But City analysts were divided whether the stock - now worth one seventh of its price about a year ago - represented good value even after Thursday's 200p tumble.

"We believe that the share price reaction following this statement has been overdone," said analysts at UBS Warburg, pointing to "good growth opportunities" at Guardian IT's data management division.

UBS Warburg, appointed by Guardian IT as its City adviser, retained a "buy" rating on the shares.

Threats to business

But HSBC, cutting its recommendation to "reduce" from "add", warned that Guardian IT's future is threatened by deep-seated changes in computer services markets.

"We believe that a structural shift and conversion is taking place... and this is likely to impact the company's long-term strategy and even survival," the bank said in a note to clients.

"While Guardian for some years has enjoyed a strong niche in the disaster recovery market, the advent of new technologies... means that there are a number of players that can offer computing as a utility service."

The development of storage area networks, Sans, back-up and retrieval devices which are sold on a rental basis, represent a particular threat, HSBC said.

Guardian, which boasts clients ranging from banks to publisher Condé Nast, will "find it difficult to compete" with the likes of Hewlett Packard and IBM, which are rolling out San services, Friday's report added.

Slump in City business

Guardian IT shares collapsed on Thursday after the firm warned that "materially worsened" market conditions, particularly in the City, had hit takings at its iXguardian web hosting division.

Shares in Guardian IT, which was floated in 1998, hit an all-time low of 197p before closing at 205p, 200p down on the day.

The warning came five months after Guardian IT claimed record forward contracted takings of £178m, while many other IT firms, such as Baltimore Technologies, were speaking of postponed orders.

Guardian in June opened a data recovery centre in Edinburgh, as part of a programme to target financial centres in expanding the unit's 32-office chain.

And the firm, which employs 500 staff in countries as far afield as South Africa and Japan, has revealed plans to launch a New Jersey recovery centre in November, to serve Wall Street dealing rooms.

Guardian IT shares closed at 255p on Friday.