Broker snap: FirstGroup turnaround remains slow, says Investec

9th Apr 2013 10:25

Investec has retained its 'hold' rating and 200p target price for transport firm FirstGroup after the firm's pre-closing trading update which showed that trading was broadly in line during the fourth quarter.The group also announced its planned sale of eight UK Bus depots in London for a combined consideration of around £80m since the end of the financial year (March 31st).Overall, FirstGroup said that underlying trading is in line with management's expectations, despite a mixed picture across its main divisions.The company said it would "consider" its full-year dividend in May following the uncertainty caused by the Department for Transport's decision to delay rail re-franchising.Investec analyst John Lawson said: "The turnaround of FirstGroup is a slow process and, despite the planned sale of the London bus business, debt remains high and the future DPS [dividend per share] is still unclear (at present, we forecast an unchanged DPS, but this could change in May when the board makes a formal decision)."The underlying trading trends look mixed (some OK, some less good), so not too much to get excited about here."Investec is forecasting a profit before tax of £179.7m and earnings per share of 27.9p for the full year, but expects a sharp drop to £134.8m and 21p next year (ending March 31st 2014), respectively.Shares were up 1.89% at 204.7p by 10:38.BC