Broker snap: MITIE no longer a 'sell'

24th May 2011 11:52

Due to MITIE's underperformance against the peer group, Peel Hunt upgrades its rating on the outsourced services provider, but notes that there are better positioned "outsourcing plays" as opportunities in the public sector increase.The group - which provides facilities, property and asset management to the public and private sector - reported 10% growth in full-year revenues, with underlying earnings and profits ahead of the broker's forecasts.Private sector revenues increased by 26% while public sector revenues fell by 10%, but the broker highlights key public sector opportunities including justice, health local authorities and social housing.Peel Hunt upgrades pre-tax profit estimates for the current year by 1%, and earnings per share predictions by 2%."With the improving momentum in the business coming through and the scale of outsourcing opportunities before the group this seems reasonable. We therefore increase our share price target to 220p [from 200p] and upgrade our recommendation from 'sell' to 'hold'," said analyst Christopher Bamberry.---BC