Proactive Investors - Mobico Group PLC's confirmation that its US school bus business is up for sale underlines the current low valuation, suggests Jefferies.
Strong [+10.2%] pricing on NASB [US school bus] contracts is supportive for both disposal interest and valuation potential, adds the bank, but even on a ‘trough’ multiple debts would fall materially.
Interim results were notable for not containing any guidance downgrades, adds the bank, which sees fair value ex-US school buses at 190p. Buy with an 80p target in its current view.
Peel Hunt (LON:PEEL) is less convinced that the net proceeds from the school bus sale will be enough to reduce debts of nearly £1bn by as much as needed but said the additional £25m of net debt reduction initiatives identified was a nice surprise.
If interest rates drop, this will boost the debt reduction process even more, it added. Hold with a 70p target is its view.
Shares rose 17% to 66p