MARKET TALK: UBS Cuts Serco To Neutral, Capita To Sell

18th Jun 2010 09:15

0815 GMT [Dow Jones] UBS downgrades Serco Group (SRP.LN) to neutral from buy and cuts Capita Group (CPI.LN) to sell from neutral in the bank's latest review of the support services sector. The brokerage sees few imminent contract awards and is wary of the lack of visibility, lengthy bid cycles, pricing pressure and competition. For both companies, UBS sees good growth and much good news already priced-in. "Current valuations look reasonable compared with a historical 17-20x range, but we believe such multiples were achieved in a different growth environment and represent a full market premium," adds UBS. It cuts Serco target to 650p from 680p. 750p target price on Capita. Serco shares -0.7% at 624p, Capita -1.8% at 785p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] (END) Dow Jones Newswires June 18, 2010 04:15 ET (08:15 GMT)