Broker tips: Capita, G4S, Prudential

13th Mar 2013 10:59

UBS has cut its rating for Capita from 'buy' to 'neutral', saying that the outsourcing company's improved fundamentals are now priced in.The broker believes that Capita's full-year results on February 28th addressed the market's major issues but the broker has longer-term concerns about falling margins and uncertainty ahead of the 2015 elections, given that the group relies heavily on the public sector.G4S's full-year results failed to please the market on Wednesday as headlines focused on the impact of one-offs, such as its failing at the London Olympics, but Panmure Gordon has reiterated its 'buy' rating and 320p target price for the security firm, saying that its underlying performance was strong."Overall while the shares have had a good run of late, we are likely to maintain a positive stance on the basis that the valuation remains undemanding particularly given the re-rating seen elsewhere in the outsourcing sector," the broker said.Investec has placed its 'hold' rating and 831p target price for financial services giant Prudential under review after the company's 2012 results significantly beat consensus forecasts."We view Prudential's FY 2012 results as very good on all metrics. As a consequence, our recommendation and sum of the parts-based target price are under review," said analyst Kevin Ryan. He said that the outperformance of the stock - up 22% so far in 2013 (including Wednesday's 2.9% rise - is likely to continue.BC