Investec raises Capita price target to 1,100p, retains 'hold'

27th Feb 2014 14:49

Outsourcing outfit Capita released "impressive" full year results, Investec said. The broker highlighted the company's strong rate of organic growth and its "very impressive" win rate. In fact, at 2 out of 3 the company managed its highest ever rate for the former.That is quite important given Investec's difficulty in trying to determine where the next major catalyst would come from and what with the shares trading on a price-to-earnings multiple of 18 times' its estimated fiscal year 2014 profits. Nonetheless, the analysts wrote that "it is also difficult not to be impressed with the quality of earnings".Other positive aspects of the firm's full-year financials included the strong cash performance, with free cash flow generation rising to £312m.Also, the company's dividend was increased by 13%, which was slightly ahead of their estimates."We continue to like the story, this is a best in class operator but the valuation tempers our enthusiasm. We reiterate our 'hold' but lift our multiples-based target price to 1,100p," Investec concluded. AB