Capita shares downgraded from 'buy'

Capita shares downgraded from 'buy'

Comments from Martyn Hart - Chairman of the National Outsourcing Association

"City analysts who have downgraded Capita from 'buy' are taking an extremely short term view. Capita is a massive player in the public sector. Although the value of four of its existing contracts has shrunk because of cutbacks, it has nearly 35 billion worth of work in the pipeline!  Following the Open Public Services white paper - which means all public sector organisations are now free to hire the most efficient provider, regardless of ownership - there is going to be so much more work available for support services companies. Capita is among the most experienced, and is in a great position to take full advantage of the devolution of buying power to a local level. Capita is converting a smaller percentage of its profits to cash as part of their acquisition strategy - a move that will bring in even more business.  City analysts need to look deeper into situations than merely scanning profit/loss and cashflow.  Although that is important of course, the National Outsourcing Association suggests that for investors taking a more mid-term view, this could be an excellent time to be buying shares in support service providers like Capita."