Why did the Computershare (ASX:CPU) share price set another record high today?

Let’s find out.

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Shares in technology and financial services provider Computershare Limited (ASX: CPU) inching higher again today and finished trading less than 1% in the green at $20.72.

This watermark signals another record high for the company, whose share price has started the year with a bang after charging 4% in the green.

Whilst there’s been no price-sensitive info out of the $12.5 billion company by market cap, let’s take a stroll through as to what’s led us to this point today.

Computershare cruises to new record highs

It was a fulfilling year for Computershare investors in 2021. Shares rallied more than 38% across the period after setting a series of higher-highs and higher-lows in that time.

The momentum prompted analysts at Morgan Stanley to update its modelling on the company, subsequently raising its price target by 20% to $21.50.

Morgan Stanley notes that Computershare’s current “management” earnings per share (EPS) guidance calls for a 2% growth period in FY22, however, it feels this figure has the potential to be revised upward.

The broker also bakes in its views on interest rates, treasury yields and cost-budgeting efforts by the company that could materialise in FY22 to support its thesis.

This is relevant to Computershare given its exposure to interest rates at the belly of the interest rate curve, particularly up to 5-years, which are incredibly attractive to Morgan Stanley.

As a result, the broker estimates an EPS growth of 10% in FY22 for the company which it sees carrying through until FY23 and FY24.

Aside from this, ASX tech shares are back in the green today amid a softening reaction to the news that US Fed chair Jerome Powell is considering hiking rates earlier and at a faster pace than previously estimated.

The S&P/ASX All Technology Index (XTX) is also up more than 1% today after a tumultuous finish to 2021, where it has plunged 7% in the last month alone.

However, investors are regaining confidence in the tech sector, particularly as the market and strategists digest news of the intended rate hikes.

Computershare share price snapshot

In the last 12 months, the Computershare share price has gained more than 48% after rallying 5% in the past month.

Shares have started the year well and are up almost 4%, well ahead of the benchmark S&P/ASX 200 Index (ASX: XJO)’s return in that time.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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