Mitie Declines After Second Downgrade in Two Days: London Mover

Mitie Group Plc, the services company that provides guards for law courts in England and Wales, fell the most in more than eight weeks after a second analyst downgrade in two days.

The shares fell 3.8 percent, the biggest intraday decline since Nov. 19, to 268.3 pence at 11:01 a.m. in London. The stock is close to unchanged over the past year, making it the fifth-worst performer among the 31 companies in the FTSE 350 Support Services Index, which rose 22 percent in the period. The volume of shares traded was 73 percent of the three-month daily average.

Mitie’s rating was cut to reduce from hold today by Howard Seymour, an analyst at Numis Securities Ltd., who said that a number of the Bristol, England-based company’s competitors are relatively cheaper and have better growth prospects.

“Mitie is well placed to continue to exploit outsourcing and bundling trends in the context of its facilities management and technical facilities management businesses,” Seymour said in a note to clients. Numis does “see other divisions continuing to face difficult conditions.”

Seymour also cut his 12-month price target to 245 pence from 285 pence. He left his underlying earnings estimates unchanged.

Mitie offers customers a number of services, from catering to pest control, and specializes in energy-performance management and “strategic” outsourcing, according to its website.

More Optimistic

Credit Suisse cut the stock to underperform from neutral yesterday. Eugene Klerk, an analyst at the Swiss investment bank, also lowered his 12-month price target to 250 pence from 290 pence.

Andy Brown, an analyst at Panmure Gordon & Co., is more optimistic about Mitie’s prospects. He raised his rating to buy from hold on Jan. 11 and lifted his price target to 310 pence from 265 pence.

Support services companies are currently a “stock picker’s paradise,” with good prospects in 2013 and beyond, Panmure analysts said in a note two days ago.

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