US broker Jefferies International believes it is it too late for Carillion PLC (LON:CLLN) “to say I’m sorry...and could we get it together again?”
In a note to clients, Jefferies analysts pointed out that last week’s interim results from the troubled construction and support services firm revealed further write-downs and an admission that the business will likely need to raise equity in order to survive.
READ: Carillion drops over 12% as says exploring options including a share issue to shore up its battered balance sheet
They said: “We estimate that Carillion needs an equity injection of c. £440mln, a 60% dilution if a right issue proves possible.”
The analysts added: “The Longer term turnaround plan appears credible, but success is dependent on the Group’s ability to help itself in the first phase of the turnaround, before looking to shareholders/outside investors.”
Reiterating a ‘hold’ rating on the stock, Jefferies cuts its target price for Carillion to 45p from 80p previously, saying: “Valuing Carillion remains more art than science.”
In early morning trading today, Carillion shares were changing hands at 50.25p each, up 0.25p on last night’s closing price.
READ: Carillion warns on full-year results, as it posts a massive first half loss after booking further contract provisions
Meanwhile analysts at Liberum Capital have kept their rating and target price for Carillion ‘under review’ in a note today.
Identifying eight major headwinds for cash, its analysts said: “The banks are now in charge.”
Looking at what the business could achieve if it survives its current turmoil, the Liberum analysts said they believe the Carillion business could have an enterprise value of £1.1bn.