Newspaper article The Evening Standard (London, England)

FirstGroup Enjoys an Armchair Ride; MARKET REPORT

Newspaper article The Evening Standard (London, England)

FirstGroup Enjoys an Armchair Ride; MARKET REPORT

Article excerpt


CHAMPAGNE corks were popping at FirstGroup, up 18 1/4p at 380 1/4p, after it won the Greater Western and Thameslink/GN rail franchises. They begin next April and run for a decade, bringing in revenue of [pounds sterling]1 billion a year.

FirstGroup had been up against stiff opposition in the shape of National Express, down 14p at 892 1/2p, and Stagecoach, 3p lower at 111 1/2p, which both failed despite intense speculation to the contrary.

Shares of another buses and trains operator, GoAhead, dropped 10p to 1590p on the back of its latest trading update ahead of interim results on 31 December. It warned rising fuel and wage costs were continuing to take a toll on its bus operations, bringing margins under pressure. Management was trying to tackle the problem, but this would take time, it warned.

That was not good enough for broker Panmure Gordon which has downgraded from buy to hold and urged clients to switch into First-Group, where it has repeated its buy rating and 390p target.

The market generally nosed ahead, but there was no real enthusiasm from investors. The FTSE 100 index rose 7.6 to 5509.1 after a lacklustre overnight performance by Wall Street, where interest rates are expected to rise tonight.

Ratcatcher and parcel courier Rentokil Initial lost 4 3/4p to 161 3/4p after US broker Morgan Stanley placed 14 million shares worth [pounds sterling]23 million with various institutions at 163 1/2p. Rentokil recently rejected an offer by former ITV boss Sir Gerry Robinson to take control of the ailing services group in return for a [pounds sterling]50 million fee. Retailer Halfords stood out with a rise of 7 3/4p to 325p after it emerged Japanese company Autobacs Seven had acquired 11.4 million shares, or 5% of the company, from venture capitalist CVC Capital.

Retail analyst Richard Ratner at broker Seymour Pierce believes the Japanese will launch a full bid within 12 months at between 350p and 360p. He continues to rate Halfords outperform.

Online poker operator Party-Gaming fell 7 1/2p to 128p, making it one of the heaviest fallers among the top 100, after invest house Lehman downgraded its shares. …

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