Broker snap: Earnings improving at Stagecoach, says Nomura

19th Aug 2011 11:55

Nomura said that the shape of future earnings at Stagecoach is improving and revised its target price for the bus and train group to 278p, from 275p previously.The firm announced on Friday that it has made a good start to the year, and revealed details of a £340m return of cash to shareholders and share consolidation.Nomura calculates that the share consolidation will cut the number of shares from 720m to 570m. "The more efficient capital structure post the share consolidation should be earnings-enhancing, with just over six months benefit in 2012E. On a full-year basis we calculate the accretion to earnings is some 16%," the broker said."We now expect earnings per share growth to re-emerge next year. However, there remain some other opportunities for this growth to start earlier, including rail refranchising and a continuation of the positive trends seen in Q1."A buy rating is kept.Shares were 2.59% up at 237.90p at 11.55.BC