🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Mobico Group stock price target cut on profit downgrade potential

EditorNatashya Angelica
Published 04/22/2024, 02:12 PM

On Monday, HSBC revised its stock price target for Mobico Group PLC (MCG:LN), a UK-based transportation company, to £1.00 from the previous £1.20. Despite the reduction, the firm continues to recommend a Buy rating for the company's shares.

The adjustment comes as the analyst acknowledged potential further profit downgrades for Mobico Group, which they believe would be limited in scope. They noted that if volume recovery and pricing trends stay robust, Mobico could approach the previously estimated forecasts for 2024.

The analyst expressed optimism about the cost reduction programs already implemented by Mobico Group. These efforts, combined with the company's financial performance, suggest that the stock may be undervalued.

Even after accounting for a £20 million increase in hybrid expenses expected in 2026, the analyst finds the shares to be attractively priced at 4 times the projected 2026 earnings per share and 8 times the enterprise value to earnings before interest and taxes (EV/EBIT).

HSBC also identified several potential catalysts that could aid Mobico Group in improving its financial standing. These include the possible sale of its school bus operations, renegotiations of bus subsidies in the UK, and potential subsidy discussions in Germany. These factors contribute to the analyst's perspective that there are opportunities for Mobico Group to make a positive turnaround.

The revised stock price target of £1.00 reflects HSBC's updated estimates for Mobico Group's financial projections. The firm maintains its Buy rating, indicating their belief that the stock holds potential for investors despite the lowered price target.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.