Shares digital

As the UK economy weakens, office cleaner to security services group MITIE could be a haven for investors, according to Altium analyst Ed Wright. He has upgraded the stock to buy from hold to reflect steady growth, good cash generation and minimal borrowings.

The target price has also been lifted by 16p to 267p. Facilities services is seen as the main driver of the business. Wright reckons MITIE stands a good chance of picking up more work from existing customers, as most of its contracts are currently only for one or two services – when it has the capacity and skills to offer much more. ‘The trend to outsourcing still looks to have some way to go. MITIE should benefit from the service-bundling trend, as customers look to reduce their supplier bases,’ adds Wright.

The shares have been volatile over the past three months, underperforming the FTSE All Share by 13.%. There is some exposure to retail and commercial property markets, but Wright likes the way MITIE has been refining its operating strategy, pushing more business to maintenance, refurbishment and upgrade work across both the public and private sectors. He is looking for 14.9p EPS this year against 12.1p in 2007.