UBS downgraded Bytes Technology Group PLC (LSE:BYIT, JSE:BYI) from neutral to sell on Monday.
The investment bank cited growing pressure from changes to Microsoft's reseller incentives. Analysts also concluded that generative AI is unlikely to provide a meaningful near-term financial boost for the firm.
Bytes Technology derives approximately 50% of its gross profit from Microsoft incentives and product mark-ups. UBS noted that investors may have underestimated the risks to the company's future earnings potential.
The downgrade coincides with the company's announcement regarding the completion of a share buyback tranche.