Public transport specialist Go-Ahead (GOG) says it is on track to deliver full-year results 'slightly ahead' of previous expectations. This pleasing news triggers forecast upgrades and sends shares in the train and bus services operator 22p or 1.35% higher to £16.50.


While some London commuters might have something different to say about their experiences of Go-Ahead's Southern Railway and Southeastern franchises, the City certainly likes the mood music from the latest half-year trading update from the £694 million cap.


Web chart - Go-Ahead - Dec 2013


Chief executive David Brown informs investors that Go-Ahead's bus and rail divisions have both delivered commercial revenue growth in the year-to-date, while Southern's second quarter performance was better-than-expected.


Through its rail division, Go-Ahead operates the Southern (including Gatwick Express), Southeastern and London Midland businesses through its 65%-owned subsidiary Govia and reports robust growth across all three franchises. Go-Ahead says reported passenger journeys across all rail operations have increased significantly, with underlying passenger journey growth running at around 2% in all three franchises, boosted by changes in Department for Transport methodology in Travelcard allocations.


Meanwhile bus operations outside London continued to motor in the second quarter, with customers in Newcastle apparently the most satisfied of any UK metropolitan area, served as they are by Go North East. In the capital, Go-Ahead assures the market robust results with strong underlying revenue and mileage growth remain the order of the day.


In response to today's update, Investec Securities upgrades its price target from £18 to £18.20 and sticks with its 'buy' rating. For the year to next June, analyst John Lawson moves his taxable profits forecast 4.4% higher to £71 million and upgrades his earnings per share estimate from 125.7p to 129.8p 'due to the expected better trading performance in the Southern rail franchise.' For 2015, Lawson nudges his profits estimate north from £75 million to £76.5 million and raises earnings from 135.4p to 137.7p.

Issue Date: 12 Dec 2013