21st Jul 2023 14:30
(Alliance News) - FirstGroup PLC has performed well so far this year despite industrial action and should make further long-term progress as the transport sector leans towards decarbonisation, analysts said on Friday.
Ahead of its annual general meeting on Friday afternoon, the Aberdeen, Scotland-based transport company said trading in the year to date was in line with expectations.
The stock was up 1.7% at 147.70 pence in London, and has gone up 11% over the last 12 months.
This reaffirmed the outlook in its annual report in June, covering the year ended March 25. At the time, FirstGroup also predicted a performance in line with expectations throughout the current financial year.
This included "further sequential progress" for its First Bus division, and profit from open access and additional services in First Rail to be at least in line with last year's.
As of yesterday, FirstGroup said it had completed GBP70.9 million of the ongoing GBP75 million on-market buyback it announced in December. It reiterated its intention to launch a further GBP115 million buyback once the current programme is complete.
Dani Hewson, head of financial analysis at AJ Bell, said the company's shares "trundled higher" on the back of the update. She said this showed "a solid performance achieved despite the ongoing impact of industrial action".
Liberum's Gerald Khoo said the company's Bus division is likely to drive up earnings, with a strong net cash balance sheet - excluding rail leases - supporting dividends and the ongoing buyback while giving FirstGroup "strategic optionality".
"In the long term, we see FirstGroup as a beneficiary of decarbonisation policies that have seen government policies and funding become increasingly supportive of promoting bus use and encouraging modal shift from private cars and taxis," Khoo added.
Liberum rates FirstGroup at 'buy', with a 180p target. Peel Hunt likewise reiterated its 'buy' rating, but set its target price at 185.0p.
By Emma Curzon, Alliance News reporter
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