Canaccord Genuity lowers target price on Stagecoach

Analysts at Canaccord Genuity cut their target price on public transport operator Stagecoach from 85.0p to 62.0p on Monday as they made downgrades to assumptions for the firm's regional bus unit.

Canaccord said long-term prospects for local bus services in the UK remained attractive, given environmental concerns such as air quality and traffic congestion.

However, in the near term, Canaccord said the Covid-19 pandemic continued to have "a major impact" on its regional bus operations.

"With social distancing rules likely to remain in place for some time, and given the increase in regional infection spikes and lockdowns, we expect the recovery in demand to take quite some time," said the analysts, which added that economic weakness, rising unemployment and structural changes to demand for local transport may also further dampen the recovery.

But despite "the unprecedented challenges" posed by Covid-19, the Canadian bank still believes that Stagecoach is "attractively valued" at current levels and opted to retain its 'buy' rating on the stock.