An upgrade in rating by Citigroup helped drive shares in Stagecoach PLC (LON:SGC) higher on Tuesday, with the US bank moving to ‘buy’ from ‘hold’ as it thinks the “worst of the negative catalysts” are now behind the transport company.
The US bank has a 171p price target on the FTSE 250-listed firm, with the stock up 5% to 160.9p in mid-morning trading.
READ: Stagecoach shares fall as it suffers £84.5mln hit from East Coast franchise loss
In a note to clients, the Citigroup analysts pointed out that in their initiation report on Stagecoach in April, they highlighted the risk of a significant cut to the dividend which came to pass with the group’s recent full-year results released at the end of June.
Furthermore, they added, the East Coast rail franchise issue has now been largely cleared up and losses recognised.
The analysts, therefore concluded: “Although we see some further risks remaining, the worst now appears to be behind and as such we think a Sell rating is no longer appropriate and upgrade to Neutral.”