Broker snap: Compass's full year in line, 'buy' says Nomura

21st Nov 2012 09:59

In spite of the negative market reaction to Compass Group's full-year results on Wednesday morning, Nomura has maintained its 'buy' rating and 800p target price for the stock, saying that the figures were in line with its forecasts.Compass, the contract catering giant listed on the FTSE 100, reported a profit before tax of £1,093m for the year to September 30th, close to Nomura's £1,098m estimate and the consensus prediction of £1,089m.While turnover of £16,905m came just short of the broker's £17,002m estimate, the dividend per share of 21.3p was slightly better than the 21.2p expected. However, Nomura said that, as expected, growth was polarised between Europe and North America/Emerging markets. In addition, the group's outlook statement suggests that conditions in Europe will remain challenging, the broker said.Compass also announced that it will be buying back £400m of shares in the 2013 calendar year, which Nomura reckons will be 3% earnings accretive.Nomura said: "Our FY 13 forecasts assume a slowdown in organic revenue growth to 4.7% [from 5.4% in the year just gone] and 10 basis points of margin upside. The implied slowdown in organic growth and new buy-back suggest that forecast risk is on the upside."The broker added: "We retain a 'buy' recommendation based on the attractive structural growth in outsourcing, strong FCF [free cash flow] generation and restructuring potential."Shares were down 1.72% at 696.78p in mid-morning trade.BC