Capita share price rises as company named preferred bidder for NHS contract

Capita Plc (LON:CPI) has been named as preferred bidder for a contract to provide administrative support services for National Health Service in England, the outsourcing giant has announced. In a statement to the London Stock Exchange today, the company said that the contract could be worth up to £1 billion.

Under the four year sole provider framework, the company could be awarded with an initial 7-to-10 year contract to deliver administrative support services for primary care in England. This contract is expected to be valued at up to £400 million, Capita said, adding that it would achieve significant cost savings for NHS England.
According to recent study commissioned by the government, the NHS could save up to £5 billion if tighter administrative controls are put in place to improve efficiency. Capita today said that under the new contract it would introduce a set of services, processes and standards to improve the quality, reliability and sustainability of administration support services, which would help the NHS to cut costs.
In today’s trading, Capita shares were up 2.1 percent at 1,258.00p, as of 14:07 BST. The stock has risen 16.4 percent since the start of the year and the company’s market capitalisation currently stands at £8.4 billion.
The 16 analysts offering 12 month price targets for Capita have a median target of 1,277.5p, with a high estimate of 1,370p and a low estimate of 950.00p. As of June 19, 2015, the consensus forecast amongst 27 polled investment analysts covering Capita had it that the company will outperform the market. This consensus estimate has been maintained since May 01, 2015, when the sentiment of investment analysts improved from “hold”.
As of 16:05 BST, Monday, 22 June, Capita PLC share price is 1,258.50p.