Serco rallies on Jefferies upgrade

8th Sep 2015 09:41

(ShareCast News) - Security and outsourcing company Serco got a boost after Jefferies upgraded the stock to 'buy' from 'hold' and lifted its price target to 157p from 145p."Let's be clear upfront: Serco is an above average risk investment. However, the shares materially underperformed in a rising equity market and have continued to underperform during the recent selloff," it said.Jefferies said management appears more in control of the business and, for the first time in well over a year, the risk/reward is now favourable.Jefferies said chief executive Rupert Soames and chief financial officer Angus Cockburn seem to be more in control now of profit drivers, risk management and expectations management.In addition, it said employees are the key to a sustained revival as attrition normalises when operational service targets are achieved and this in turn has a positive impact on bid pipeline conversion. "People skills are a strong point of the new management team," said Jefferies.At 0953 BST, Serco shares were up 3.7% at 108.60p.