**IN THE KNOW: Stagecoach Solid, But All Eyes On East Coast Award **
LONDON (Alliance News) – Investec says Stagecoach’s good like-for-like revenue growth in all divisions was consistent and encouraging, but all eyes will be on the East Coast Mainline rail franchise award.
The brokerage has reiterated its Add rating on the stock, saying it remains a quality pick, but the East Coast franchise announcement will be key going forward. Stagecoach is bidding with Virgin and is on a shortlist of three bidding groups. Stagecoach has a 90% stake in the consortium.
Investec says it is unlikely to change its fiscal 2015 earnings per share forecast of 26 pence, despite additional start-up costs, described as “a few million”, in Stagecoach’s European megabus.com services. However, it says its pretax profit forecast might be nearer GBP184 million than the GBP186.7 million it is currently forecasting due to a marginally lower tax charge than previously estimated.
“Megabus.com continues to do well in North America and in the UK, with Continental Europe as a new area for potential growth, with some additional start-up costs flagged today,” Investec analyst John Lawson said.
Stagecoach shares were down 1.0% at 386.80 pence Wednesday morning.
By Steve McGrath; email@example.com; @stevemcgrath1
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