Broker snap: Credit Suisse ups target on Compass

15th Mar 2012 11:44

Credit Suisse has this morning decided to raise its price target on shares of food and support services firm Compass.The above due to both cyclical and structural factors. As regards the former, these analysts highlight the fact that, "cyclical trends are encouraging especially in the US with hours worked growth rising to 3% and our geographically weighted Manpower survey of hiring intentions at its highest since Q3 2008 - we estimate each 1% of extra cyclical revenue adds 2% to earnings per share."As well, and from a structural point of view, Credit Suisse calls attention to the pick-up seen in awards for catering contracts in the European public sector. These are running up at a 16% year-on-year pace and are now 67% higher than four years ago back. Lastly, Credit Suisse points out that the firm´s share buy-back plan will raise 2013 earnings per share by 3.5%. Due to all of the above the analysts have decided to raise their target price on the company´s shares to 744p from 685p, while retaining their outperform rating on its stock. AB