Credit Suisse spies higher dividend payouts at G4S

Credit Suisse bumped up its target price on shares of G4S as it spied a return to increased dividend payouts as the company continued to put its house in order while slashing away at its gearing.

The security services provider had already lowered its financial leverage from 2.8 at the end of 2016 from 3.4 at the close of 2015, the Swiss broker said, with cash conversion in the final three months of 2016 running at 141% - boosted by improved working capital.

"We think there is further progress to be made in the near and medium term," analysts Andy Grobler, Karl Green and Daniel Hobden said.

Strong EBITDA growth, good cash conversion (albeit lower than the exceptional rates seen in 2016) and asset sales would allow basic net debt as a proportion of EBITDA to fall to 2.2 by end-2017 and 1.9 by end-2018.

"This will allow, in our view, dividends to rise from full year 2017E onwards."

Credit Suisse raised its target price for the stock from 285p to 310p and kept the shares at 'Outperform'.