Capita "gearing up for growth", Numis upgrades

9th Jun 2014 11:12

The share price of UK business process management and outsourcing group Capita received a boost on Monday from Numis Securities, which raised its recommendation on the stock from 'hold' to 'buy'.The broker also hiked its target price from 1,152p to 1,365p, representing 21% upside from Friday's closing price of 1,130p.Analysts Julian Carter and Steve Woolf said the company is "gearing up for growth" after strong contract win momentum and acquisitions made year-to-date. "We believe the market is underestimating the growth momentum of the business, and that the more explicit focus on return on capital employed should stabilise or improve returns in 2014-16," they said.Ahead of Capita's interim results due on July 23rd, Numis has pencilled in 10% organic sales growth in the first half, underpinned by the annualised impact of contract wins in 2013 and improved trading in its 'spot' businesses, notably in Asset Services.Revenues are expected to total £2,062m, up 13% on a reported basis, while pre-tax profit is forecast to rise 15% to £236.3m.Capita was trading 1.6% higher at 1,148p by 11:16.BC