Capita share price subdued as Goldman Sachs slashes valuation

on Dec 21, 2016
Updated: Oct 21, 2019

Shares in Capita (LON:CPI) have again fallen into the red, underperforming the broader London market, as analysts at Goldman Sachs slashed their valuation on the shares. The move follows the company’s update earlier this month when the outsourcing group trimmed its guidance for a second time in three months.

As of 14:41 GMT, Capita’s share price had lost 0.72 percent to 495.00p, underperforming the broader market, with the benchmark FTSE 100 index currently 0.15 percent worse off at 7,033.20 points. The group’s shares have lost just under 60 percent of their value this year, as compared with a 12.6-percent rise in the Footsie.
Goldman Sachs trimmed its price target on Capita today from 771p to 595p today, while keeping its ‘neutral’ stance on the company. The broker expects free cash flow to decline around by about three percent each year for the next two years following the FTSE 100 group’s recent trading update.

“In general, we see risks that the company’s restructuring plan will not address the major concerns we have about bidding process and increasing cyclicality of the business model,“ Goldman Sachs pointed out, as quoted by Reuters.
Earlier this month, Capita warned that it expected its full-year underlying profit before tax to come in at at least £515 million, as compared with a September guidance of between £535 million and £555 million, which in turn was below an earlier forecast of £614 million.
The 19 analysts offering 12-month price targets for Capita for the Financial Times have a median target of 535.00p on the shares, with a high estimate of 1,090.00p and a low estimate of 440.00p. As of December 17, the consensus forecast amongst 26 polled investment analysts covering the outsourcing group advises investors to hold their position in the company.
As of 15:00 GMT, Wednesday, 21 December, Capita PLC share price is 496.20p.

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