RBC Capital starts Mitie at 'outperform', says it's 'fundamentally undervalued'
By Michele Maatouk
Date: Thursday 04 Dec 2025
(Sharecast News) - RBC Capital Markets initiated coverage of facilities management firm Mitie Group on Thursday with an 'outperform' rating and 195p price target.
"Mitie has aligned services with high-growth macro-trends, driving a record £33bn pipeline that feeds a £16.5bn order book, having grown circa 45% since the F2025-27E strategic plan launch," the bank said.
"We see Mitie as a good defensive play, delivering 11% earnings growth (2year-CAGR) and 5%/year shareholder returns."
RBC said forecasts indicate Mitie is on track to achieve free cash flow targets of £120m and £150m in F2026E/F2027E.
"As infill M&A remains a core priority, our forecasts suggest Mitie can invest up to circa £75m/year using FCF and available debt funding, and still remain within its target leverage range of 0.75-1.5x," the bank said.
This translates to revenue and operating profit growth of about 4% a year from acquisitions, supporting return on invested capital consistently above 20%.
RBC said its forecast of about 5% F2026 shareholder return includes a dividend payout of 30-40%, and the current £100m share buyback.
"We view Mitie as currently fundamentally undervalued, and we expect a multiple re-rating on Mitie shares as it executes on its strategic plan," it said.
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