LONDON (SHARECAST) - Shares in engineering and design consultancy WS Atkins were hit on Friday on concerns about the company's involvement in the high-profile West Coast franchising fiasco.
According to a report in The Times, Atkins acted as a technical advisor to the Department for Transport on the West Coast refranchising.
The paper said that the company is under investigation for its role, though analyst Andy Brown from Panmure Gordon said this morning that the broker is awaiting clarification about the scope of its involvement.
"Rail has accounted for c10% of group revenue and headcount in recent years. It has been involved in a number of high-profile schemes so we do not believe that this particular project will have a significant negative financial impact," Brown said.
"The bigger hit is likely to be on share price sentiment. This follows the uncertainty created by Peter Brown and the cautious Q1 update."
Nevertheless, he said Atkins has a strong expertise in Rail and the negative sentiment surrounding the group's involvement in Metronet did not stop it from winning further government related work.
"In the short term, however, this uncertainty may hold the share price back."
Panmure maintained its 'buy' rating and 800p target price on the stock.
By 10:45 on Friday, shares were down 3.91% at 700.5p.