Seymour Pierce has reiterated its 'buy' recommendation and 700p target price for outsourcing giant Serco following the firm's pre-close trading statement on Thursday.

Serco said that it is on track to meet full-year estimates and is expecting "to deliver another year of strong revenue growth, including further good organic growth, together with an increase in adjusted operating margin similar to that achieved in 2011".

Seymour Pierce said that it is not making any changes to its forecasts or recommendation following this update. The broker estimates a 2012 adjusted profit before tax of £275.7m, slightly above the consensus forecast of £271.7m.

"We remain buyers of the shares on account of the company's geographical and operational diversity which we believe puts the company in a strong position to deliver growth," said analyst Caroline de La Soujeole.

She said that the shares are trading at 13.5 times current-year earnings, well below their 'five-year through the cycle' average multiple of 16.2.

The stock was up 0.74% at 548p by 10:03.

BC

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