Broker snap: Capita still a 'sell' after in-line first half

25th Jul 2013 10:15

Westhouse Securities has reiterated its 'sell' rating and 813p target price for outsourcing giant Capita, saying that stock remains expensive following its first-half results.Interim numbers reported on Thursday were "exactly in line" with Westhouse's forecasts, with earnings per share up 9.0% and the dividend up 10%. The broker doesn't think that the consensus estimates are likely to change materially following the update.Analyst Michael Donnelly said that the momentum in the share price has shown no signs of letting up as of late - up 37% year to date as of Wednesday - pushing its valuation to a five-year high."We believe that the current level of valuation requires a significant and sustained return to historical levels of organic growth that we believe will prove very challenging to deliver," he said."We believe that the strong run year to date provides an opportunity to take profits and the falling margin, and qualitative guidance on the sizeable implementation efforts required in the near term, provide a further rationale for our call."The stock was down 3.57% at 1,000p by 10:14.BC