Deutsche Bank gave a lift to Capita PLC (LON:CPI) shares on Tuesday, upgrading its rating for the outsourcing group to ‘hold’ from ‘sell’ on valuation grounds.
The German bank, however, trimmed its target price for the FTSE 250-listed firm to 150p from155p, with the stock just hovering above that level at 150.05p, up 2.3% on Monday’s close.
READ: Capita downgraded to ‘sell’ by UBS as analysts cast doubt on 2020 turnaround
In a note to clients, Deutsche Bank’s analysts pointed out that Capita shares are now down by 20% from their post-election highs.
They said: “We harbour concerns that the costs of making Capita a 'digitally-enabled' BPO provider will be excessive, but these are now more reasonably priced in, in our view.”
The analysts added: “We have largely left our SOTP intact from our downgrade note on Dec 18th , however, we have decided to marginally reduce the multiple we place on potential disposals to only 10x 20e EBITA down from 12x.”