Broker snap: FirstGroup results in line but outlook disappoints, says Jefferies

20th May 2013 09:58

Jefferies has kept its 'hold' rating and 190p target price for transport firm FirstGroup, saying that while the full-year results on Monday were broadly in line with forecasts, the outlook statement was a little disappointing.The company reported a headline profit before tax of £172.4m for the year to March 31st, down 36.5% year-on-year but broadly in line with the consensus estimate of £175m, though well below Jefferies' £187m forecast.FirstGroup also announced a 'three for two' £615m rights issue to be used for investment and to cut debt.Analyst Joe Spooner said: "FirstGroup's announced £615m rights issue looks due to defensive rather than positive reasons. We believe it should help to shore up the group's investment grade and help avoid the ramifications of potential downgrade."As for the outlook statement, Spooner said he was disappointed as "nothing materially new appease to be being promised". "The group is targeting double-digit margins in UK Bus and First Student, but we knew that".The stock was down 22.25% at 174p by 10:41.BC