Broker snap: Pricing pressures assail Interserve

Sector wide uncertainty is likely to dampen enthusiasm for Interserve, the services, maintenance and building group, despite the attractions of the 9.4% dividend yield, according to KBC Peel Hunt.The broker has downgraded its earnings per share (EPS) forecasts for the current financial year (2011E) by 9%, putting it towards the lower end of the range of market forecasts. With "few triggers for a re-rating" KBC Peel Hunt now rates the shares merely a "hold", down from its previous stance of "buy"."Interserve has a broad portfolio of activities and continues to offer long-term growth opportunities. However, we believe that the near term is likely to remain challenging for all sector participants as volume pressures combine with pricing pressures. However, the income attractions remain a key support and this is likely to limit underperformance," KBC analyst Andrew Nussey believes.