Jefferies expects momentum to return to G4S (LON:GFS) in the first half of the year, Citywire reports. The comments came after the blue-chip company posted its full-year results yesterday, revealing downbeat performance in the Middle East and India where it continues to face challenging trading conditions.
G4S’ share price, which fell following the results yesterday, has advanced in London in today’s session, having added 1.08 percent to 261.10p as of 10:26 GMT. The shares are outperforming the broader UK market, with the benchmark FTSE 100 having slipped marginally into the red and currently standing 0.08 percent lower at 7,197.75 points. The group’s shares have lost just under 10 percent of their value over the past year, as compared with about a 1.6-percent dip in the Footsie.
Jefferies sees G4S as ‘buy’
Jefferies reiterated its ‘buy’ stance on G4S yesterday, valuing the shares at 330p. Citywire quoted the broker’s analyst Kean Marden as commenting that the group’s organic revenue growth “should improve materially over the next few quarters”. The analyst further explained that investor nervousness regarding cost pass-through was understandable with US and non-wage costs having risen over the past 18 months, and that while these inflationary costs were usually passed on to customers, it was nevertheless at a lag.
“Momentum should recover in the first half of 2018 driven by improving emerging markets and US wage inflation,” the analyst continued, adding that G4S’ price to earnings ratio looked “increasingly cheap relative to history”.
Other analysts on group
SEB Equities upgraded G4S to a ‘hold’ today, without specifying a price target on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 311p.