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Liberum downgrades National Express to ‘hold’ amid less favourable US dollar exchange rate

Liberum's analysts cut their estimates for the transport operator by 2% across the board to reflect the translation impact on US earnings

National Express bus en route
The analysts said: “Strong share price performance has left the valuation appearing up with events”

Liberum Capital has downgraded its rating for National Express Group PLC (LON:NEX) to ‘hold’ from ‘buy’ and cut its price target to 410p from 420p after cutting earnings forecasts to reflect sterling's rebound against the US dollar.

In a note to clients, analysts at Liberum said they reduced their estimates by 2% across the board to reflect a less favourable dollar exchange rate impacting the translation of US earnings.

READ:National Express shrugs off US cold spell as passenger numbers climb

The analysts noted that the FTSE 250-listed group derives the majority of its earnings from outside the UK, around 73% based on 2018 estimated operating profit.

They explained: “Although this remains favourable from a political risk point of view, the currency translation tailwind the group has enjoyed over the past two years is reversing as sterling rebounds, against the US dollar most notably.”

The analysts concluded: "National Express remains the best-in-class public transport operator, with all divisions trading well, limited exposure to UK political risk and no exposure to UK rail following its exit last year." 

But it added that: “Strong share price performance has left the valuation appearing up with events”

In late morning trading, National Express shares were 1% lower at 408.4p.

Quick facts: National Express

Price: 439.2 GBX

LSE:NEX
Market: LSE
Market Cap: £2.25 billion
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