Proactive Investors - Run By Investors For Investors

Investec tells Stagecoach investors to ‘mind the gap’

Investec tells Stagecoach investors to ‘mind the gap’
Expectations of Stagecoach’s future market share are “unrealistically high”, the City broker says

The market assumes UK bus and train firm Stagecoach (LON:SGC) will have an unrealistically high share of the future rail market says Investec, which today downgrades the FTSE 250 share to ‘sell’.

Analyst Alex Paterson, in a note on the UK public transport sector, highlighted the negative impact of delays in the rail network – the majority of which he says stem from state-owned Network Rail – as well as the potential impact of ‘the living wage’ on profits.

But, regulatory change is seen as the biggest potential impact for Stagecoach and the broader sector. Specifically, he highlights that the ‘Bus Bill’ and the regional devolution of controls over local bus services as the biggest threat to Stagecoach’s margins.

Whilst downgrading to ‘sell’, Paterson sets a new price target of 300p which suggests some 12% downside to the current price of 344p.

There’s a pair of oil and gas upgrades from Liberum Capital which lifts both BG (LON:BG.) and BP (LON:BP.) to ‘buy’ from ‘hold’ as analyst Jean-Pierre Dmirdjian says the risk-versus-reward has improved for ‘big oil’ stocks.

“Dividends remain a priority and are supported by breakeven at US$50-70 Brent and solid balance sheets,” Dmirdjian said in a note.

Liberum’s target for BG increases to 1,165p, implying 17% upside to the current price of around 988p whereas the BP target moves to 405p suggesting potential for 22% upside to the current price of 330p.

Experian (LON:EXPN) is upgraded by HSBC to ‘buy’ from ‘hold’.

Barclays Capital has downgrade asset management group Close Brothers (LON:CBG) to ‘equal weight’ from ‘overweight’.

Jamie_55a91591db06b.jpg


Register here to be notified of future SGC Company articles

No investment advice: The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use