Serco Group plc

Strong 2021 upgrades and FCF momentum clear, but stock unloved

  • Sectors : Business Support Services
  • Companies : Serco Group plc

Ratings and price correct at time of issue.

  • Serco Group plc

    Closing Price: 128p

  • RATING 01/04/21



Serco does not report at the Q3 stage but is scheduled to give an update in December. While there are headwinds for all businesses at present (particularly wage inflation and supply issues), we see no material changes to full year or 2022E forecasts at present and anticipate both the December Capital Markets Day (CMD) and trading update to give comfort to what has been a disappointing recent share price. Serco has offered solid, contract-backed EPS upgrades through 2021 (+12% on the 2022E forecasts) and strong FCF – but the market continues to de-rate the stock.

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Oct 15 2021, 07:00 IST/BST