Go-Ahead Group, the bus and train operator whose shares fell more than 13% on Friday when it warned on profits for the year at its rail division, seems to have reversed its fortunes today despite conflicting views on its future prospects.
Shares have risen 70p, or 3.8%, to £19.10 so far, sending it in the top 10 risers on the FTSE 250.
The reason seems to lie in a Dresdner Kleinwort note, the company's house broker, which has upgraded it to buy from hold.
Go-Ahead on Friday announced its first half results, and investors were spooked at signs of weakening demand at its bus and rail divisions. Nearly £170m was wiped off the value of the company.
Dresdner reacted by cutting its price target for the firm, but today decided to upgrade the stock to a "buy".
Analysts said that the worsening losses in its Midlands Bus division and higher fuel costs were disappointing, but the remaining bus operations and the UK rail division were trading strongly.
They said: "Aviance [the airport services unit] is also showing signs of improvement. In general, we believe these businesses should be relatively resilient in a slowing economic environment and that the shares represent good value at these levels."
Panmure Gordon, however, was of the opposite view. Analysts there cut their price target to £20 from £24.40, but kept their "hold" recommendation. They also cut their profit forecasts for the year and beyond.
They said: "We believe rail uncertainties are likely to hold back the shares for the foreseeable future. The rail division accounts for nearly half of Go-Ahead's clean operating profit and the potential negative impact of an economic slowdown combined with next year's expiry of its most profitable rail franchise (in our view)means our hold rating is unchanged."
