Source - SMW
Numis has upgraded its recommendation on Capita (LON:CPI) to 'buy' from 'hold' on valuation grounds, despite the outsourcing group's shock profit warning.

The broker said: "Capita's profit warning and conference call highlighted a number of challenges - operational execution (TFL contract) and sales management (losing share in IT reselling market; not identifying changes in recruitment processes).

"But the cash generating qualities of the business remain, and management does not plan to cut the dividend or do a capital raise to strengthen the balance sheet."

However, analysts have cut their target price to 890 pence a share (from 1,115 pence).

Meanwhile JP Morgan Cazenove repeated its 'neutral' call but lowered its target to 760 pence (from 1,080 pence), stating that there are too many questions for the stock to materially re-rate in the short run.

At 1:55pm: (LON:CPI) Capita Group The PLC share price was -35.25p at 662.75p