Go-Ahead drops as fears grow over its dividend
More than £94m was wiped off the value of bus and train operator Go-Ahead after analysts cast doubt on its ability to cover its dividends.
Deutsche Bank raised concerns about the transport firm’s growth prospects, pointing to a lack of new contracts in the pipeline.
As a result, the investment bank downgraded Go-Ahead from ‘buy’ to ‘hold’ and slashed its target price from 2340p to 1840p, saying it was hard to argue that they were undervalued.
Deutsche also predicted the Thameslink operator would fall short of the £44m of free cash flow needed to cover its dividends in at least two of the next three years. However, it added that the company had the capacity to cover the payments.
In a note, Deutsche said: ‘We continue to believe Go-Ahead is robust with a net cash balance sheet. However, in the absence of future rail franchise wins, and with Go-Ahead’s bus businesses seeing the same muted trends as the rest of the industry, it is less clear that shares are significantly undervalued.’ Shares charged 11.2pc, or 219p, lower to 1735p.
The FTSE 100 dipped 0.54pc, or 40.51 points, to 7502.69, while the
FTSE 250 shed 0.68pc, or 140.40 points, to end at 20,365.87.
Entertainment One shot to the top of the FTSe 350 after signing a multi-year deal to co-produce shows with Fired Up Films.
Fired Up was established last year by Simon Howley and JonBarrie Waddell, who both worked on popular 1990s early morning show The Big Breakfast.
It follows hot on the heels of eone’s deal earlier this month to buy a controlling stake in ex on the Beach producer Whizz Kid entertainment. Shares jumped 4.9pc, or 13.2p, to 285.2p.
James Fisher & Sons ticked up after the FTSe 250-listed marine engineer boasted of a number of contract wins in a first-quarter trading update. Shares floated 4.3pc, or 74p, higher to 1780p.
Shares in precision engineering firm IMI slid after it warned of ‘continuing uncertainty’ within some of its divisions, despite revenues growing 3pc in the first quarter. IMI shares dipped 6.1pc, or 69p, to 1060p.
In the small caps, analysts at Peel Hunt downgraded electrical retailer AO World from ‘hold’ to ‘buy’, saying it had already ‘grown into our valuation’. Shares dipped 1.3pc, or 2p, to 148p.
Disappointing sales in the first four months of the year hit shares in Trinity Mirror, the publishers of the Daily Mirror newspaper.
Trinity blamed the Beast from the east for a 9pc fall in total revenue in the four months to April 29. Print revenue was down 11pc over the period, although digital revenue was up 2pc. Shares in Trinity, whose deal to merge with the owner of the express newspaper is being probed by the competition and media watchdogs, edged 1.2pc, or 1p, lower to 85.5p.
Charles Taylor, which provides technical services to the insurance industry, has agreed to buy Latin American insurance technology business Inworx for a fee that could reach £37.2m.
The small-cap firm will pay for the deal, in part, by raising £17.6m from shareholders. Shares ticked up 5.4pc, or 14p, to 275p.
Broker Cantor Fitzgerald started its coverage of marketing technology company Albert Technologies with a ‘buy’ recommendation.
In its note, Cantor called its artificial intelligence marketing technology a game changer that is ‘helping brands take back control as ad spend shifts back in-house’. The shares rose 8.5p, or 3p, to 38.5p. Ixico, a neuroscience technology company, tapped up investors for £5.5m to push into the US and boost its tech, but saw its shares dive 7.5pc, or 2.5p, to 31p.