- Capita
- 29 September 2025 09:25:08
Source: Sharecast
It noted that Capita is one of the UK's largest public sector business process services/outsourcing (BPS/O) providers and said investors may remember it for "a chequered past, false starts and asset disposals".
"However, we believe its turnaround is at an inflection point now and gaining steam - Public Service (circa 2/3 of group sales) is a healthy outsourcing business with good forward visibility, mid-single digit organic growth and improving margins," Canaccord said.
It said Pension Solutions is "the jewel in the crown", with a solid mid-single-digit growth outlook and mid-teens margins.
Meanwhile, Contact Centre is Capita's "problem child" but at around break-even is not a major drag and may be non-core in the future, Canaccord said.
It said Capita is making a big push to infuse leading edge Tech & Generative AI across all its operations, which should improve customer outcomes, growth prospects, efficiency and margins.
"The shares’ 0.17x CY26e EV/Sales, 1.9x EBITDA and less than 4x PE put it materially below key UK peer Serco and global BPS names on 2-3x these multiples," it said.
"As Capita delivers on its mid-term guidance of low- to mid-single-digit growth, 6%-8% adjusted EBIT margins and positive free cash, we believe the shares should see a material re-rating."
Canaccord said its 900p price target uses conservative assumptions and implies more than 3x upside.
At 0920 BST, the shares were up 15.4% at 303.50p.