G4S continues on the road to recovery

UBS outlines potential scenarios to unlock hidden value in the business
Thursday 11 Jan 2018 Author: David Stevenson

G4S (GFS) 285.9p

Gain to date: 11.6%

Original entry point: Buy at 256.2p, 16 November 2017

FTSE 100 support services company G4S (GFS) looks to be back on track after a torrid time last year when the company flagged issues that hurt its share price.

Investment bank UBS says now is the time to buy the shares, echoing our bullish view which we published two months ago.

UBS suggests G4S could undergo a period of selling assets and potentially undertake a radical strategic shift for its Cash business.

It suggests G4S could raise up to £480m of cash from disposal proceeds and use that to reduce its net debt to EBITDA ratio to below 1.5-times for the first time in over a decade. That in turn could lead to higher dividend payments.

An alternative could to be sell its Cash business or even demerge it as a separately-listed entity, says UBS.

G4S will next update on trading when it reports full year results on 8 March.

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