Broker snap: Cautious IMS from Capita, says Investec

18th Nov 2011 10:26

Investec has reiterated its hold recommendation on business outsourcing company Capita, highlighting a "more cautious tone" to the group's interim management statement released on Friday.The company said that it expects to see organic revenues fall by 7% in 2011. Nevertheless, the group has derived 14% growth from acquisitions which will boost the reported revenue figure by 7%. "The group has had a reasonable year in terms of contract wins but the expected pick-up in the second half is clearly not coming through at the levels hoped for earlier in the year," said Investec analyst Robert Morton.The broker cuts its current-year earnings per share estimates and, as such, its target price from 725p to 630p."Although the shares have underperformed the market recently, we would expect them to go easier on today's announcement and remain out of favour until the news flow improves."Investec's prediction proved correct, with shares down 3.75% at 642.5p by 10:49.BC