- Mobico Group
- 26 March 2024 13:02:21
Source: Sharecast
The bank said it was cutting its adjusted EBIT forecasts - mostly in German Rail - and incorporating a further £95m of provisions in its EV-to-equity bridge, following the statement yesterday.
RBC said it sees more attractive risk-reward elsewhere, hence the downgrade.
"Other stocks in the sector are trading on larger discounts to long-term average EV valuation multiples (on earnings forecasts which have a better recent track record of being delivered or exceeded)," it noted.
The bank said it still expects share price upside on a 12-month view, and its downgrade could prove wrong in the event of a favourable disposal scenario, or if further share purchases by the largest shareholder drive up the shares.
"However, we think suppressed valuation multiples elsewhere in the transport sector, and recent track record of downgrades limit scope for multiple expansion in a disposal scenario.
"We show inside one North American School Bus disposal scenario offering upside just over around 90p, above our price target of circa 80p.
"We do not think this offers sufficient upside to warrant an outperform recommendation given above-average risk and limited visibility over earnings and cash flows."
Mobico was formerly known as National Express.
