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STOCKS NEWS EUROPE-G4S falls as CS joins the cluster of downgrades

Reuters - UK Focus

Security firm G4S (LSE: GFS.L - news) fell up to 1.5 percent to briefly top the list of fallers on the FTSE 100 (FTSE: ^FTSE - news) after Credit Suisse (NYSE: CS - news) becomes the latest house to cut its earnings per share estimates on the company, by as much as 22 percent over the next two years, and downgrade its rating to "neutral" from "outperform".

Credit Suisse joins a cluster of other investment banks and analysts who have cut earnings forecasts for G4S in the last week.

8 of 20 analysts since Aug. 28 have revised their 2013 EPS forecasts for G4S down by an average of 21.7 percent and 52 percent of analysts have downgraded forecasts for 2014 EPS by an average of 20.9 percent, while top analysts in the sector still expect the company to miss consensus forecasts for the current full-year by 13.5 percent, according to Thomson Reuters Starmine data.

The downgrades come shortly after G4S, the world's largest security services firm, under new chief executive Ashley Almanza, raised 348 million pounds ($541 million) through a share sale with more to come from asset disposals as its new boss seeks to cut debt and focus on emerging markets growth.

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"Given the challenges in the UK government market, sluggish trading in Europe and its developed market cash solutions operations, (and) the scale of the corporate regeneration to be undertaken we think it's too early to price in the kind of success produced at Compass (LSE: CPG.L - news) following Richard Cousins' arrival in 2006," Credit Suisse says in a note.

Although it says a reinforced balance sheet and 2013 margins, which it believes will be the trough, will provide a firmer background for new CEO Ashley Almanza to begin the recuperation of GFS.

After months of uncertainty surrounding the business the company's shares have already re-rated to 14.8 times forward 12-month price-to-earnings, compared with its peer group on 15.9 times, according to Thomson Reuters Starmine data.

Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net