Win or lose, Jefferies expects the award of the Southeastern's franchise in the Autumn to be a "key event" for public transport provider Go-Ahead's share price as its analysts pointed to upside either way.
Jefferies sum-of-the-parts assessment pointed to a share price as high as 2,300p if it wins the Southeastern award, or 2,000p if it were to go to a competitor.

Besides potentially driving incremental EBIT and earnings per share contributions of roughly £35m and 40p per year, respectively, Jefferies saw other opportunities for Go-Ahead from its Govia Thameslink transitioning into a profitable unit after its contract with Keolis, which expires in 2021, has stabilised and from the mobilisation of international contracts, as well as from further overseas bidding still to come.

The analysts noted that tight management was needed at Go-Ahead's core, with the impact of lost mileage from its London Bus business leveraged against fixed costs would require "efficiency focus" in the short-term, then mileage rebuilding thereafter.

Jefferies also sees Go-Ahead moving away from defending its own portfolio in the London bidding cycle and focus its attention towards taking competitors' routes next year.

All in all, as the broker reiterated its 'buy' rating on Go-Ahead's stock, it also upped its target price on its share from 2,100p to 2,200p.

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