RBC Capital ups Capita to ‘outperform’, cites signs of stabilisation

RBC Capital Markets upgraded outsourcer Capita on Thursday to ‘outperform’ from ‘sector perform’ and lifted the price target to 70p from 55p, saying it was “one for the brave”.
The bank said Capita is not without risks but there are signs of stabilisation. The balance sheet is de-gearing, with further disposals to come, and the business is being simplified, it said.

“Whilst it remains in the ‘uninvestable’ camp for many, we have reworked new divisional numbers, cashflow and valuation and now see enough upside on a risk-reward basis,” RBC said.

The bank noted that it has attached a “speculative risk” qualifier to its rating.

At 1030 GMT, the shares were up 6.2% at 47.25p.

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