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Go-Ahead Group target price cut as RBC notes “limited upside” from UK market amid bus and rail revenue contraction

The Canadian bank the company’s international operations were now “key for future growth”

Go Ahead Group - Go-Ahead Group target price cut as RBC notes “limited upside” from UK market amid bus and rail revenue contraction

Go-Ahead Group PLC (LON:GOG) has had its target price cut to 1,230p from 2,050p by analysts at RBC, who said the group’s UK operations will provide “limited upside” amid a predicted revenue contraction in its rail and bus business as passenger traffic falls due to the coronavirus pandemic.

In a note on Thursday, the firm also reiterated its ‘sector perform’ rating on the owner of Govia Thameslink and Southeastern Rail, highlighting a “challenging” backdrop for its UK bus business due to cost inflation and “pressure on traffic” from an adverse modal shift due to low fuel prices, online retail, working from home and macro and Brexit risks.

READ: Bus operators rally after £1.6bn TFL bail-out

The bank also said the company’s two rail franchise extensions under new protection contracts were limiting both upside and downside risk, and as a result the company’s international operations were now “key for future growth”.

RBC also said that they did not expect the firm to pay out a dividend until the second half of 2021.

Shares in Go-Ahead fell 1.5% to 1,200p in late-morning trading.

Quick facts: Go Ahead Group

Price: 814 GBX

LSE:GOG
Market: LSE
Market Cap: £351.46 m
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