Broker snap: Serco still a 'sell'

16th Dec 2010 11:51

Serco's recent dull share price is not enough to get Panmure Gordon to change its negative stance on the stock as the broker's preference in the sector remains elsewhere.Full-year trading for the outsourcing giant remains in-line with expectations, according to the broker, as the group reiterated its margin guidance in a statement Thursday.While Serco notes strong organic revenue growth and a target of 6.3% for 2012 margin guidance, revenue expectations were recently "muted by government related spending issues," says analyst Andy Brown.Serco remains an excellent operator, adds Brown, but the valuation - trading at a 2011 price-to-earnings ratio of 16 - "remains up with events".Recent "supply chain issues" have knocked the share price. The broker retains its 'sell' recommendation and 360p target price.