Interserve’s (IRV) market valuation was subject to a double-digit markdown following publication of a note by Liberum flagging rapid deterioration in the group's Middle Eastern markets this year and next. Liberum reduced Interserve's rating from buy to hold, while cutting its target price 30 per cent to 440p a share.
Earlier in the week it also emerged that the support services group was exiting a number of estate management contracts with three Leicestershire NHS trusts earlier than anticipated. The original seven-year outsourcing deal was worth £300m and covered the provision of services such as catering, cleaning and security for around 550 NHS buildings across the county. The group will continue to work with the trusts on construction, including a new emergency department in Leicester, but a joint statement described the contracts as “no longer appropriate to the needs of the Trusts today”. We don't believe that there will be a material impact on Interserve, and it's also worth noting that the contracts have delivered the intended savings to the trusts.