Liberum nudges up price target on National Express
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Analysts at Liberum raised their target price on National Express from 400.0p to 425.0p on Tuesday, highlighting the firm's ability to remaining earnings and cash flow positive and its extra liquidity headroom.
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They said that National Express' position had "improved" since their last update, with the group still expecting to remain EBITDA and cash flow positive through the current quarter despite most of its markets being in lockdown.
The analysts added that there was now greater clarity on how many services were operating and how much contractual customers were paying.
"While corporate and local authority customers are generally paying a larger percentage of pre-crisis revenue than we had previously assumed, this does not impact profits materially since we assume the excess over fixed costs is being passed on to staff," said Liberum.
Liberum also pointed to the fact that National Express had secured additional credit facilities from existing relationship banks and the UK government's Covid-19 relief fund.
"It now has £200m of cash in hand, plus £1bn of committed undrawn facilities. We make no material changes to our forecasts, although following the decision to withdraw the previously declared final dividend for 2019 we assume no dividends will be declared for 2020 either," said Liberum, which also stood by its 'buy' rating on the group.