Broker tips: Go-Ahead, Booker, Mothercare

18th Oct 2012 11:13

Jefferies has maintained its 'hold' rating and 1,220p target price for transport group Go-Ahead, saying that while the new target for bus profits should be well-received, there is still some uncertainty surrounding rail franchises.Go-Ahead said that bus operating profit should grow to £100m by 2015/2016, which Jefferies says is "feasible" as long as there is a "step change in performance". Analyst Joe Spooner said that this new target "should be well received as the observation to date has been that the group has needed rail to provide the cushion in its dividend cover, but rail faces the uncertainty of expiring franchises. The new target implies existing rail profits will be replaced by bus by FY16."Panmure Gordon has retained its 'buy' rating for cash and carry chain Booker after the firm's better-than-anticipated interim results and synergies expected from the Makro deal.The broker said that since returning to the stock market, Booker has delivered strong earnings and dividend growth and cash generation. "We think that the addition of Makro will enhance Booker's growth and we remain buyers of the shares with a target price of 108p."Seymour Pierce has retained its 'sell' recommendation for baby and mother products retailer Mothercare despite the group's well-received second quarter trading update on Thursday."We do not believe Mothercare is an easy fix and brand repositions tend to take longer than expected. It will be difficult to make Mothercare relevant again for the modern mother as it has strong competition from Amazon and the supermarkets."BC