Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Jefferies believes that although Capita is ”deeply unloved”, its risk/reward is slowly improving

The FTSE 250-listed firm’s recent trading update, the US broker raised its rating on Capita to ‘buy’ from ‘hold’ after boosting their target price to 750p from 465p
Capita sign
In early trading this morning, Capita shares were 3.6%, or 23.5p higher at 669.0p

Jefferies International believes that although struggling outsourcer Capita PLC (LON:CPI) is ”deeply unloved”, the risk/reward for the group is slowly improving, leading the broker to upgrade its rating for the stock.

In a note to clients, following the FTSE 250-listed firm’s recent trading update, the US broker raised its rating on Capita to ‘buy’ from ‘hold’ after boosting their target price to 750p from 465p.

In early trading this morning, having posted a 15% share price leap after its AGM update on June 13, Capita shares were 3.6%, or 23.5p higher at 669.0p.

READ: Capita says overall trading in line with expectations

Jefferies analysts said:  “There is evidence of change under the Chairman, a full price for the CAS (Capital Asset  Services) disposal would derisk the balance sheet, IFRS15 is benign, and equity markets seem willing to back management turnarounds at a very early stage.”

They added: “With the UK in perpetual political turmoil, trading will remain difficult but lowly valuation multiples underappreciate self-help.“

In its recent trading update,  Capita said its overall trading in the year to date has been in line with expectations, and added that it has also drawn up a shortlist of “strong candidates” to replace its departing chief executive, Andy Parker.

READ: Capita boss quits as outsourcer reports drop in full year profits

The group announced in March that Parker is to depart in the autumn, at the same time as its reported a 33% drop 2016 pre-tax profit to £74.8mln, impacted by weak revenues in both its recruitment and IT services businesses, plus a £50mln write-down of assets.

Capita also lost its blue chip status in March, being demoted from the FTSE 100 index.

View full CPI profile View Profile

Capita Group Timeline

Related Articles

Interviewees
August 22 2017
The specialist staffing group reported a record set of interim results as net fee income grew for the sixteenth consecutive quarter
drillcore.png
May 05 2017
Revenues are up, as are underlying earnings, while the company is also splashing the cash
call centre
November 09 2017
The company has been granted two patents for the technology underlying its secure payments platform, CallGuard

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use