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STOCKS TO WATCH: City grumbling about the state of Capita

INVENTORIES TO WATCH: City grumbling about the state of outsourcing group Capita has gotten louder lately



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The grumbling in the city about the state of the outsourcing group Capita has been growing louder lately.

It’s been four years since turnaround specialist Jon Lewis arrived from engineer Amec Foster Wheeler. Since then, his job at the sink has involved a £700m cash call to investors and an ongoing asset sale.

Capita’s stock price has fallen 76 percent in two years, and hedge fund Marshall Wace has increased its bet on the stock since last fall.

Closer look: Capita's share price has fallen 76 percent in two years

Closer look: Capita’s share price has fallen 76 percent in two years

A string of senior executives have recently been fired from the company, which handles London’s congestion charge. Head of Corporate Affairs Katja Hall, formerly of HSBC, left at the end of last year.

It turns out that two of Lewis’ lieutenants at Amec who followed him have also been released: corporate development officer Rupert Green and chief transformation officer Garry Dryburgh.

Does Lewis think the turnaround has been achieved or was it collateral damage in his effort to accelerate the sluggish restructuring?

Latest results to show Netflix progress

Netflix proved to be a pandemic choice for investors as lockdowns drove consumers to the streaming platform.

This week, a fourth quarter trading update should show new subscriber growth continuing.

Smash hits like South Korea’s Squid Game helped boost signups and even created a new revenue stream in branded items.

Investors hope the $230 billion (£168 billion) juggernaut can repeat the trick in 2022.

Bankers expect telecom deal frenzy

Telecom bankers are convinced there will be a European deal frenzy this year with Vodafone, its Vantage Towers infrastructure arm and BT and its Openreach division seen as bidding targets.

STOCKS TO WATCH City grumbling about the state of Capita

STOCKS TO WATCH City grumbling about the state of Capita

But BT’s home broker JPMorgan said last week the stock was attractive regardless of a deal, arguing that rising inflation and a friendly regulatory environment should boost the stock.

Director Akhil Dattani argued that the threat of BT losing a wholesale client like Sky to Virgin was exaggerated and the value of Openreach could more than double to £40bn.

Investors seem to agree.

The stock has risen to highs not seen since August, though it is still beyond the June 2021 peak when tycoon Patrick Drahi bought in.

Analysts expect Taylor Wimpey’s operating profit to be around £820m

Taylor Wimpey will provide an update tomorrow on trading at a tumultuous point for the homebuilder.

Investors piled up for Christmas when activist Elliott called for an outsider to be named to succeed outgoing boss Pete Redfern.

But the gains were wiped out after the government said builders will have to pay to replace unsafe cladding after the Grenfell Tower disaster.

Analysts still expect Wimpey to show an annual operating profit of around £820 million and a positive update on its country bank and order book.

But the search for the CEO is the most pressing issue. Internal candidates Jennie Daly and Chris Carney are the frontrunners to take the lead if Wimpey can hold off Elliott’s advances.

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