Broker snap: No love for Capita at Ambrian

11th May 2010 10:18

Capita's latest trading update has failed to impress Ambrian, which keeps its 'sell' rating on the outsourcing firm.The company reported strong trading so far this year, but the broker says the statement continues to show historically weak organic growth with limited new contract wins.A hung parliament following last week's general election could delay any new central government public sector outsourcing, but increased competition in back office outsourcing is a more permanent feature, thinks Ambrian."Growth achieved by acquisition or share buyback is no substitute for the strong organic growth needed to support a premium rating such as that enjoyed by Capita."Contracts won in the year to date will only deliver annual revenue of around £65m a year, worth only an incremental 2.4% to the 2009 revenue total, it says.