Broker snap: FirstGroup has 'more to do'

13th May 2010 11:58

The outlook appears to be stabilising at bus and trains firm FirstGroup, but Nomura worries that it will take time to get debt levels down to sector averages.Plans to reduce the high levels of debt "look sensible", says the broker. Wednesday's final results revealed net debt fell to £2.28bn in the year to 31 March from £2.50bn in 2009.Its net cash generation target has been increased to £150m for 2010/11."We have slightly increased our valuation to take account of the higher net cash generation in 2011," Nomura says, but the 'reduce' rating remains and the target price rises just 10p to 375p."Our price target still assumes a 10% discount for the leverage, which is still above sector averages."