Broker snap: Bid pipeline at Capita looks strong, says Galvan

10th Oct 2011 12:58

Galvan Research and Trading rates Capita shares as a buy, saying that the firm could see an "outsourcing bid pipeline boom".The broker says that following the government's austerity measures last year, the market has been overly pessimistic on the prospects for outsourcing firms.However, the bid pipeline for the first half of the year more than doubled from the first half of 2010, as the company secured contracts totalling £1.1bn. "Outsourcing is designed to achieve efficiencies and is particularly suited to economic downturns, a factor well illustrated by the Capita forward bid pipeline," said head of research Andrew Gibson."Even though the stock has outperformed the FTSE 100, the 'rapidly replenished' bid pipeline has arguably yet to be factored into the current valuation," he said.The stock is given a target price of 760p.By 12:52, shares were trading 0.35% higher at 713p.BC