JP Morgan Cazenove lifted Go Ahead Group PLC (LON:GOG) from ‘neutral’ to an ‘overweight’ rating today, despite the transport provider admitting struggles with its GTR rail franchise in yesterday’s trading update.
The broker said: “While this [was] disappointing, the Bus parts of the business, which we believe should be valued higher, are actually performing slightly better than our expectations.”
It added that it believes Go Ahead “has fundamentally strong businesses”, and with the balance sheet delevering, it sees “now as a good entry point.”
Although it lowered its price target to 2472p from 2521p, JP Morgan Cazenove says there is still 22% upside potential in the stock.
There were some mixed notes from brokers regarding another transport firm FirstGroup PLC (LON:FGP), with Shore Capital repeating its ‘buy’ recommendation, while HSBC reiterated its ‘hold’ recommendation, and JP Morgan Cazenove cut its target price for the stock.
Shore Capital said that the group’s “results were ahead of our expectations”, with the “real possibility” of a return to paying a dividend helped to further boost the stock in its opinion.
On the other hand, HSBC wasn’t quite so upbeat and reiterated its ‘hold’ rating, saying it was “surprised by the positive share price reaction” to the results, given that, in HSBC’s opinion, it’s “difficult to be confident about the outlook.”
In what must’ve been a busy day for JP Morgan Cazenove, the broker also repeated its ‘overweight’ recommendation for multi-utility supplier Telecom Plus PLC (LON:TEP), with a price target of 1260p.
The broker noted that difficult market conditions were weighing down on the firm at the moment, although it was sure that “it is only a matter of time before more favourable market conditions lead to an acceleration of growth for Telecom Plus.”
The investment bank reiterated its ‘underweight’ rating for technology group Halma LPC (LON:HLMA) as it claimed that there is “greater opportunity elsewhere in the sector,” although it did raise the target by 30p to 750p.
JP Morgan Cazenove applauded the company on its “typically strong performance” in 2016 but despite the growth, it couldn’t see much potential upside in the stock.
“We model the growth to continue but not at a level that supports a valuation that remains close to an all-time high,” it said in today’s note.
Elsewhere, BMO Capital Markets upgraded oil giant Royal Dutch Shell ‘A’ (LON:RDSA) from an ‘underperform’ recommendation to ‘market perform’.