Investec upgrades forecasts on Go-Ahead

19th Jun 2014 13:57

Investec has upgraded its profit forecasts on Go-Ahead after the train and bus operator said annual profits in its rail arm would be higher than expected.The broker increased its pre-tax forecast for 2013/14 by 9% to £83m this year and by 7% to £93m in 2014/15. It also upped its price target on the stock to 2,670p from 2,630p.Go-Ahead on Thursday said it expected rail's operating profit to top previous expectations due to lower energy costs and better-than-expected fourth quarter operational performance.The group also expected its bus division to continue to make good progress towards its bus operating profit target of £100m by 2015/16.Investec said the final rail outcome was hard to predict, but it was encouraged that the group's forecast for its buses had stayed the same.The broker said: "Go-Ahead is delivering a powerful message and, along with a further decline in debt, this hastens the day when the dividend per share might be increased. We keep our 'buy'."Shares in Go-Ahead rose 94p or 4.3% to 2271p by 15:30 in London.PW