RBC Capital Markets lowers Go-Ahead to 'sector perform', raises target price

Analysts at RBC Capital Markets lowered their target price on public transport operator Go-Ahead Group from 'outperform' to 'sector perform' on Monday, stating the risk/reward scenario for the stock now looked more balanced.

RBC Capital Markets pointed out that Go-Ahead had backed an offer from a consortium of Kinetic Holding and Globalvia, both backed by Canada's OP Trust and other funds, in which shareholders will receive £15 per share.

It also noted that another bidder, Australian-listed Kelsian, remained interested and stated that the market was discounting some probability of a counter offer in Go-Ahead shares.

The Canadian bank hiked its target price on Go-Ahead from 1,000.0p to 1,600.0p, citing a similar probability and potential upside from this to the market.

"We see upside beyond our PT if a counter offer is made, however, market conditions have tightened in recent weeks, and we think it is reasonably probable that no counter offer is made," said RBC.

Reporting by Iain Gilbert at Sharecast.com