The £100mln company crashed into the red in the opening six months of 2018 as it carries out a major overhaul of its business, a process which has seen it exit non-core businesses and renegotiate onerous contracts.
For the six months ended June 30, Interserve posted a pre-tax loss of £6.0mln, compared to a profit of £24.9mln in the year-ago period.
“There were crumbs of comfort at H1; EBIT was in line, the Energy for Waste guidance seemed on track and net debt was better,” read a note to clients.
“However, there are plenty of worries; EPS was hit by the higher interest charge and EfW could still surprise negatively. This is a highly leveraged and risky situation and a rights issue is needed, despite the prospect of disposals.”
The City broker kept its ‘hold’ recommendation in place but cut its price target to 63p from 90p.
Interserve shares dipped 1.1% to 61.9p in mid-morning trading.