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Capita (CPI) shares are top of the UK 100 this morning after gapping higher and potentially beginning a share price reversal from 2yr lows that takes it back to end-Dec highs 1230p. The positive move comes courtesy of traders getting excited by an AGM trading update that allows the company reiterate full year guidance, something not every corporate has managed. Confidence from the outsourcer in meeting its goals and consensus expectations for 2016 stems from $458m of major contract wins thus far (District councils, Debenhams) coupled with no change in the healthy £4.7bn bid pipeline presented at end-February. Add to this divisional growth which has clearly building on last year’s success to produce faster organic growth and with no material contracts (>1% revs) up for renewal in 2016 and the outlook is good. After such a good start some are understandably asking whether the company is staying cautious at this early stage. Potential for expectations to be beaten and guidance raised as the year progresses may have presented an opportunity to buy in around the lows.
Mike van Dulken, Head of Research, 10 May
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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