Berenberg reiterates 'hold' on Interserve, drops target price

In a research note sent to clients, analysts at the German broker referred to a "variety of headwinds in the past 18 months," including a "significant" increased £160m exceptional provision relating to problems with the firms Glasgow EfW project that put considerable pressure on its balance sheet.

With no specific updates given in regards to the issues to the issues that were impacting that project, Berenberg believed it had not been put in the rear mirror of the company just yet, with the possibility of future troubles still capable of arising from EfW for Interserve.

Together with a 33% decline in underlying earnings per share and a 28% decline in underlying EBIT in Interserve's first half results published earlier in the month, thanks to a £2m EBIT loss from its UK construction division that has been given no clarity on potential for a turnaround, led Berenberg to cut its EBIT projections a further 10 to 13% for the next two years.

The analysts also noted that issues at the EfW project had further hampered an already poor cash flow, forcing Interserve management to increase its average debt guidance between £450-475m for 2017.

As of 1335 BST, shares were mostly unchanged, down 0.60% to 171.50p.