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Cap Gemini Jumps Most in Four Months on Outlook: Paris Mover

Cap Gemini Jumps Most in Four Months on Outlook
Cap Gemini forecast higher margins amid “limited” revenue growth expectations, after beating analyst estimates in 2011. Photographer: Antoine Antoniol/Bloomberg

Feb. 16 (Bloomberg) -- Cap Gemini SA, France’s biggest computer-services company, jumped the most in four months after predicting its operating profit margin will rise this year.

The company, which competes with International Business Machines Corp. in helping companies with their computer network setups, rose as much as 8.4 percent in Paris, the biggest jump since Oct. 4. The shares were 3.6 percent higher at 30.29 euros as of 10:45 a.m. The stock was the biggest gainer on France’s benchmark CAC 40 Index.

“We think we can achieve margin improvement despite very uneven hypotheses for the second half of 2012,” Chief Executive Officer Paul Hermelin said on a conference call. He predicted 2012 sales growth “similar or higher than” in the fourth quarter of last year, when revenue climbed 3.3 percent.

Cap Gemini forecast higher margins amid “limited” revenue growth expectations after beating analyst estimates in 2011. The company, whose software engineers helped upgrade the flight control system for German civil aviation, didn’t put a precise figure on its forecast, citing reduced visibility and an “uncertain” economy.

“The ‘limited’ revenue growth forecast is a starting point,” said Milan Radia, an analyst at Jefferies. “They have a good chance of outperforming that.” He has a “buy” recommendation on the stock with a share-price estimate of 42 euros.

Cap Gemini said sales progress showed no sign of slowing down in the first weeks of this year.

Analysts estimate a 2012 revenue increase of about 2 percent to 9.9 billion euros, based on 19 estimates compiled by Bloomberg. The operating margin is expected at 6.7 percent of revenue, down from 7.4 percent in 2011.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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