GFS.L Share News (GFS)

(ShareCast News) - RBC Capital Markets raised its rating on G4S to 'sector perform' from 'underperform' on Monday and reiterated a target price of 170p for the security giant.The analyst said G4S looks set to benefit from a weaker pound while demand for the security industry has increased following recent terrorist attacks in Europe. RBC also believes Brexit will not impact G4S from an operational perspective."We believe G4S should really be a 3-4% organic revenue growth company, with broadly stable margins and a high cash conversion," said analyst Andrew Brooke.The stock has suffered recently on balance sheet concerns as the group has a high level of debt along with a high current dividend payout, pension top-up payments and onerous contract cash costs. The drop in the pound following the UK's vote to leave the European Union on 24 June has also affected debt in euros and dollars. Given lower bond yields, the pension deficit is potentially higher. As a result the balance sheet position is likely to have deteriorated, RBC said."To get round this, we think management should bite the bullet and raise equity - we think £400m makes sense," Brooke said."This takes the pressure off disposals, gets the rating agencies off its back and gives management more flexibility."Shares fell 0.33% to 181.60p at 0912 BST.