Canaccord Genuity raises target price on National Express

Analysts at Canaccord Genuity raised their target price on public transport provider National Express from 255.0p to 330.0p on Wednesday, stating it was “increasingly confident” that the firm’s financial performance will “largely return to normal” in 2022.
Canaccord, which reiterated its ‘buy’ rating on the stock, said National Express remains, a “quality operator”, in its view, with strong customer relationships and best-in-class margins in virtually all its businesses.

The Canadian bank highlighted that National Express had no liquidity concerns and believes the company to be “well-positioned” to bounce back strongly once the Covid-19 pandemic can be brought under control.

“Even though we are reducing our estimates for 2021, we expect the group’s financial performance to bounce back strongly in 2022 to approach pre-pandemic levels,” which cut its full-year earnings forecasts for National Express from £365.9m to £320.3m.

Canaccord also said it was “increasingly confident” that trading conditions will largely revert to normal by next year, leading it to switch its valuation methodology from a discounted cash flow-based sum-of-the-parts to an earnings multiples-based approach and amend its target price as a result.

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