Berenberg hikes target on National Express by half after vaccine news

Analysts at Berenberg hiked their target price for shares of National Express by nearly half in the wake of the company's latest trading update.

Reinstated guidance from the coach operator led the broker to lower its estimates for 2020.

However, those for 2022 were unchanged and the "outlook has arguably improved given recent vaccine news," they said.

Berenberg raised its target price from 190p to 280p and reiterated its 'buy' recommendation.

The broker's analysts also highlighted the announcement of another contract win in Portugal, which they said showed the "almost unlimited" addressable market for a best-in-class company like National Express.

Furthermore, revenues had returned to 70% of their pre-Covid levels in October, despite the reimposition of lockdowns in the UK and Spain.

"With news on a vaccine also increasingly promising, we continue to believe that earnings can recover by 2022E, leaving the shares still looking very cheap," they added.

National Express shares were currently changing hands on 7.9 times' their estimated price-to-earnings multiple for 2020, against the low-teens multiple they sported before Covid-19.

They also highlighted the choice of Ignacio Garat as the company's new boss, whom they anticipated would focus on improving asset utilisation - and thus margins - and optimising the company's processes in order to minimise waste at the firms depots.