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Growth at G4S less secure, say Morgan Stanley analysts as they downgrade

Published: 10:58 14 Aug 2017 BST

g4s van
G4S shares are up by more than 25% so far in 2017

Shares in security firm G4S PLC (LON:GFS) were in the red this morning after the FTSE 100-listed company was downgraded by Morgan Stanley.

Analysts at the investment bank had the stock as ‘overweight’ but today lowered that recommendation to ‘equal weight’ on fears that growth may be hard to come by in the “challenging” security sector.

“Whilst organic growth has been greater than +6% over the last 18 months, the outlook for the next 12 months is more challenging we believe due to difficult end markets and a high comp effect,” wrote Andrew Farnell in a note to clients.

“Management made reference to Middle East, India and UK as a headwind to growth, which it expects to continue for macroeconomic reasons.”

On top of the lower growth expectations for the coming year, the analyst also cites “elevated trading multiples” compared to peers and its historical range as another reason for lower his recommendation.

In addition to the rating downgrade, Farnell also cut his price target by 5% to 315p from 330p.

That’s still ahead of where the shares are at this morning though; they’re down 1% for the day so far to 296.4p.

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