Broker snap: Nomura cautious about transport stocks

26th Jan 2012 10:07

Nomura has downgraded its rating on the 'European Industrial Transportation' sector from bullish to neutral, saying that it expects slow growth or even no growth from stocks this year.The broker highlights the following three trends: sub-trend volume growth to continue; tough comps in the early months; focus maintained on sub-sector leaders.In its summary of the sector, Nomura said: "with the outlook for volume growth finely balanced between sub-trend growth and a double dip, and visibility as poor as we can remember it, we retain cautious forecasts at the start of 2012 and as a consequence focus our investment recommendations on the strongest companies in each subsector." The broker said that it plans to avoid companies with "strategic or management challenges, or where valuations imply a rapid recovery that will prove hard to achieve in these challenging market conditions."Changes/reiterations that Nomura has made to the UK transportation stocks under its coverage are are as follows:IAG: Nomura keeps buy rating and 265p target. Firstgroup: Nomura downgrades from neutral to reduce, target cut from 333p to 330p. Go-Ahead: Nomura cuts target from 1,500p to 1,480p, neutral rating kept. Stagecoach: Nomura raises target from 281p to 305p, reiterates buy. EasyJet: Nomura reiterates buy rating and 470p target.DP World: Nomura slashes target from 1,040p to 880p, buy rating unchanged.Ryanair: Nomura downgrades from buy to neutral, target cut from €5.50 to €4.90.BC