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The Expert View: Xaar, HSBC and Anite

by Chris Marshall on Dec 10, 2013 at 05:01

‘Self-help’ opportunity offers ‘clear upside’ for FirstGroup

Investors should ‘buy’ shares in FirstGroup (FGP.L), suggested Liberum analyst Gerald Khoo in a review of UK public transport shares in which he also gave Go-Ahead (GOG.L) the thumbs up.

Khoo identified three main risks for the sector: renewals of contracts; rule changes, with the potential re-regulation of UK bus services; and the possibility of rail renationalisation should Labour win the next General Election.

He concluded: ‘We prefer stocks that have self-help initiatives that can deliver material earnings improvements despite these overhanging uncertainties.’

FirstGroup has the ‘clearest self-help opportunities’, he said. ‘Although there is no silver bullet solution… low investor expectations create the opportunity for outperformance through a steady recovery.’

Khoo also assigns Go-Ahead a 'buy' rating, while he gives both National Express (NEX.L) and Stagecoach (SGC.L) ‘hold’ ratings.

Shares in FirstGroup rose 0.3% on Monday, to 117p.

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