STOCKS TO WATCH: Grumbling in City over state of Capita

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STOCKS TO WATCH: Grumbling in the City over the state of outsourcing group Capita has been growing louder of late


Grumbling in the City over the state of outsourcing group Capita has been growing louder of late. 

It is four years since turnaround specialist Jon Lewis arrived from engineer Amec Foster Wheeler. Since then, his kitchen sink job has included a £700million cash call to investors and an ongoing fire sale of assets. 

Capita’s share price has fallen 76 per cent in two years and hedge fund Marshall Wace has been upping its bet against the stock since last autumn. 

Under scrutiny: Capita's share price has fallen 76 per cent in two years

Under scrutiny: Capita’s share price has fallen 76 per cent in two years

A string of senior bosses were recently made redundant at the firm, which handles the London congestion charge. Corporate affairs chief Katja Hall, formerly of HSBC, left late last year. 

Now it emerges two of Lewis’s lieutenants at Amec, who followed him over, have also been let go – corporate development officer Rupert Green and chief transformation officer Garry Dryburgh. 

Does Lewis think the turnaround is done or were they collateral damage in his bid to speed up the sluggish restructure?

Latest results to show Netflix progress 

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

This week a fourth-quarter trading update should show new subscriber numbers have picked up further. 

Smash hits such as South Korea’s Squid Game helped drive signups and even spurred a new revenue stream in branded merchandise. 

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

Bankers expect telecoms deal frenzy 

Telecoms bankers are convinced a European deal frenzy will take hold this year with Vodafone, its Vantage Towers infrastructure arm and BT and its Openreach division seen as bid targets. 

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

Managing director Akhil Dattani argued the threat of BT losing a wholesale client like Sky to Virgin had been overstated, and that Openreach’s value could more than double to £40billion.

Investors appear to agree. 

The stock has crept up to highs not seen since August, though it is still off its June 2021 peak when tycoon Patrick Drahi bought in. 

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

Taylor Wimpey will update on trading tomorrow at a tumultuous point for the housebuilder. 

Investors piled in before Christmas as activist Elliott called for an outsider to be named as successor to 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 are still expecting Wimpey to show an annual operating profit of around £820million and a positive update on its land bank and order book. 

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

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