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Numis’ well-regarded support services team has raised its stance on FTSE 250 player Mitie from hold to add and upped its target price following ‘bang in line’ interims.
Although engineering operations underperformed, the core support services business delivered strong growth, with profits tumbling in at £23.4 million. For March 2006, the team forecasts profits of £50.5 million and earnings of 10.8p and has set a 200p target for the shares, up from 185p. Mitie is ‘a sound company with the potential to grow earnings by ten per cent a year or higher’.

On AIM, Numis sees considerable upside at Connaught, the property services counter and leading player in the £10 billion social housing services market, ‘where growth prospects are significant for the next five years and above average over the next ten years’. Last year, Connaught lifted profits by 27 per cent to £9.2 million.

Shop client Augean is another ‘buy’, even though forecasts have been downgraded and permit delays have dogged its fortunes. Encouragingly, Augean has won a Pollution Prevention Control permit to operate monocells at Peterborough from the Environment Agency. For 2005, investors should expect profits of £3.4 million (scythed back from £8 million), and earnings of 4.6p, placing the shares on a pricey forward rating of over 30 times. Numis argues Augean has great strategic value in the hazardous waste landfill market with waste legislation trends positive and weakness likely to entice general waste management predators.