BofA stays at 'buy' for Serco, spies upside from Brexit and global defence

To back up their case, BofA pointed to the 'opportunity' from Brexit fallout and "global defence upside", adding that the firm was well-positioned to gain a greater share of the domestic market.

On the back of the above, BofA trimmed its estimate for the company's underlying trading profit in 2020 by 1% to £161m but raised that for 2021 by 6% to £165m.

Also contributing to the broker's higher estimates for 2021 was the firm's acquisition of Facilities First Australia, which it said explained Serco's better-than-expected guidance versus BofA's previous projections.

BofA upped its target price for Serco from 185.0p to 190.0p, putting on 24 times' their estimated price-to-earnings multiple for 2021 and a 15% premium against the Stoxx 600 which was not "too dissimilar" from its average 12-year premium of approximately 20%.