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This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Buy – G4S - 13 June 2018

Trade Parameters

  • Opening Price: 281.9p
  • Stop Loss: 276p (5.9p/2.1% below)
  • Profit Limit: 294p (12.1p/4.3% above)
  • Reward vs Risk: 2.1x
  • CFD Margin: 8%

Observations – For

  • Rising channel since late March
  • Stochastics stuck in upper half (bullish)
  • RSI bounce from rising lows support
  • Momentum nearing rising lows support positive
  • Bullish reversal on Point & Figure chart

Observations – Against

  • No bullish cross on Directional Indicators
  • Stochastics overbought
  • Moving average support far below
  • Volume waning

Analyst Comments

The company’s May trading update suggested Q1 trading in-line with the Full year outlook given in March, expecting growth to accelerate in the second half of the year.  New contract sales of £500m year-to-date vs. £1.4bn for the whole of 2017. Making progress on revenue growth and improved productivity.

Consensus is bullish with 66% of brokers suggesting Buy, and only 5% advocating Sell. The consensus 12-month target of 311p is well above our short-term objective of revisiting Jan highs of 294p (best since last Aug), while 76% of broker targets suggest upside from current levels.

Risks to the GFS share price include, but are not restricted to, disappointing financial results which markets may react to badly, anything that impacts profits forecasts, an economic recession that reduces the need for outsourcing, a bout of aggressive profit taking, corporate difficulties (accounting, legal) and brokers downgrading their rating and/or profit forecasts.

Next Event: Half-year results, 8 Aug; Ex-div, end-Aug

Latest Broker 12-Month Consensus: 66% Buy, 28% Hold, 5% Sell (full breakdown on request)

Source: DowJones Newswires, Reuters News, Bloomberg  or Company Press releases

8-month (daily): Stochastics, MACD, ADX (Trend strength), RSI and Momentum

Share 1wk 1m 3m 6m 1yr 2yr 3yr 4yr 5yr
Perf % 2.3 4.3 8.2 11.2 -14.8 50.4 -2.5 10.6 16.5
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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.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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