Broker snap: Compass exuding confidence, says Jefferies

28th Nov 2012 09:41

Jefferies has upgraded its rating for contract caterer Compass Group from 'underperform' to 'hold', saying that last week's full-year results offset some concerns."Compass's £400m share buyback reload, 10% dividend increase and reiterated guidance for FY13E exudes confidence," the broker said in a research report on Wednesday."And that provides enough comfort to offset concerns about deteriorating trading in Europe and margin stagnation, in our view."Nevertheless, the broker did highlight that trading had weakened and falling volumes in Europe would overshadow decent performances elsewhere. "We see little prospect of an underlying earnings upgrade in the shorter term".The price target for the stock has been hiked from 590p to 710p, which is based on a price-to-earnings multiple of 15 (was 13), in line with the recent historical average.Shares were up 0.62% at 727p in morning trade.BC