Broker snap: FirstGroup school buses to slow down

18th Jan 2010 09:39

Subdued profit growth in its US school bus operations is likely to hold back earnings at rail and bus group FirstGroup after this year, according to Nomura.The Japanese broker, which has a 'neutral' recommendation and a 375p target price on FirstGroup, has upgraded its earnings per share estimates for the current year by 3%, but lowered them by 6% for the following year.Delays to planned cost reductions combined with a stagnant revenue outlook are likely to see profits much flatter next year, the broker predicts. However, it is encouraged by an improvement in revenue growth compared with 2009 in UK bus and rail operations and the Greyhound inter-city bus service in North America.Revenues from Greyhound at the half year stage fell to £309.4m from £326m over the same period the previous year, against overall revenues that climbed to £2.90bn from £2.77bn.