Capita PLC's (LSE:CPI) share price has been downgraded by analysts at Deutsche Bank after yesterday’s trading update, but the rating is still a buy for recovery.
Profits guidance was in line with previous forecasts but revenues and cash flow weaker.
Revenues are down 8% over 11 months with a high-single digit decline now expected in 2024.
The shortfall appears to have been driven by Experience minus 16.3% over 11 months, including Contact Centres at minus 18.5%, on prior year one-offs and unexpected lower volumes on a telecommunications contract.
Profits nevertheless appear to be helped by cost savings, but free cash outflow of £120 million to £140 million is up from prior guidance for £90 million to £110 million.
Deutsche Bank’s new target is 27p, from 30p, against a market price of around 15p.