All aboard as Stagecoach shares rise on profit hopes

INVESTORS jumped aboard Stagecoach after the train and bus operator raised its profit forecasts.

In a trading update, the company said sales were up across almost all its divisions in the second half of the financial year.

This included strong growth from its UK bus operations and the Virgin Rail Group, in which it has a 49pc stake.

Its wider rail business is set to be boosted by a settlement with the Government and Network Rail over disruption at Waterloo station in London two years ago.

Analysts at RBC Capital estimate Stagecoach will get up to £7m for the problems, which caused severe delays on South West services it formerly ran. It was welcome news for investors after the company posted a £22.6m half-year loss in December.

Stagecoach said it also expected the £214m sale of its North American arm to private equity firm Variant to be finished by the end of this month. It sent shares in the transport group 3.5pc, or 5.4p, higher to 160.2p. Stagecoach reports full-year results in June.

Over on the FTSE 100, which rose 27.16 points to 7418.28, firms sensitive to the twists and turns of Brexit climbed higher as investors became more confident the UK was in for a soft Brexit.

Persimmon rose 3.7pc, or 79p, to 2241p and fellow builder Taylor

Wimpey was up 8pc, or 16p, to 187.05p. Banking groups Lloyds (up 2.3pc, or 1.48p, to 64.88p) and

Barclays (up 2.5pc, or 4p, to 164p) were also lifted higher.

But tobacco stocks tumbled after figures from the US showed cigarette sales had weakened in March. Imperial Brands fell 4.1pc, or 108.5p, to 2519.5p and British American Tobacco fell 1.9pc, or 59.5p, to 3119p.

Burberry was the third biggest blue-chip faller after it was hit by two glum analyst notes, dipping 2pc, or 40p, to 1934p.

Researchers at JP Morgan slashed their profit forecasts for the luxury retailer over Brexit concerns, while Bank of America Merrill Lynch has downgraded it from ‘neutral’ to ‘underperform’.

Lynch’s rating change came after its analysts raised doubts about the speed of Burberry’s turnaround plans.

Since the arrival of new creative director Riccardo Tisci, the company has been trying to attract younger customers and take the brand more upmarket to revitalise sales. But Lynch analysts said: ‘While we have no doubt management will remain confident in tone, we think there are few signs of a turnaround.’

Iron ore pellet maker Ferrexpo, which is listed in London but based in Switzerland, was down 3.6pc, or 9.7p, to 278.3p after an analyst downgrade. JP Morgan cut its rating from ‘overweight’ to ‘neutral’ just days after Ferrexpo announced it would delay the publication of full-year results to the end of April, over an investigation into the possible misuse of charitable donations.

The FTSE 250 firm is probing ‘unexplained discrepancies’ in bank statements related to Blooming Land, a charity it set up in Ukraine. Among the small caps, PhotoMe International was a big faller after blaming a profit warning on Brexit woes.

The Surrey company, which operates photo booths, amusement machines and laundry machines, said full-year profits would be lower than expected after a ‘challenging’ second half.

For the year ending April, it is now expecting to bring in ‘slightly’ less than its previous £44m forecast. Last year Photo-Me generated £50.2m in profit after revenues of £229.8m. Its shares fell 5.6pc, or 4.7p, to 79.7p.