Go-Ahead Group PLC (LON:GOG) shares steamed nearly 13% higher in morning trading on Thursday as the transport operator reported a solid first half performance, helped by a strong performance from rail where the firm operates the Thameslink and Southern services.
The FTSE 250-listed firm saw its half-year pretax increase by19% to £79.7mln, up from £67.0mln a year earlier as revenue rose to £1.8bn from £1.7 bn.
The group said its bus division results were stable and in line with expectations, with the unit's operating profit at £46.6mln, a tick up from £46.4mln a year earlier.
It added that rail division results were ahead of expectations, however, as its operating profit nearly doubled to £40.3mln, up from £26.6mln in the same period a year earlier, albeit flattered by one-offs related to the now ended London Midlands franchise.
The company said the Thameslink route achieved the highest 83% satisfaction in the network's history and cancellations on the Southern services were reduced by 36% in the four-week period to January 6, compared with the same period a year earlier.
Go-Ahead maintained its interim dividend at 30.17p.
In early morning trading, Go-Ahead shares were up 14.2% at 1,528p.
In a note to clients, analysts at investment bank Liberum said: "Adverse sentiment towards the rail industry is understandable, but appears overdone.The cross over between the June 2018E (7.4x) and dividend yield (7.6%) before reflecting the improved guidance would seem to point to valuation support at these levels."
Liberum repeated a 'buy' rating and 1,810p target price on Go-Ahead shares.