SHAW.L Share News (SHAW)

(ShareCast News) - Stagecoach Group's shares declined on Thursday as Investec cut its rating to 'sell' from 'reduce' and target price to 250p from 300p.Investec said Stagecoach's trading update on Wednesday revealed softer revenues than expected in all divisions, apart from North America.The FTSE 250 bus and rail group said its expectations for group adjusted earnings per share for the year ending 30 April 2016 "has not significantly changed" since its interim results announcement in early December.Like-for-like (LFL) revenue growth trends at UK regional bus and UK rail have both declined from the first half, with bus sales down to 0.7% for the 40 weeks to 6 February from 1% at the half year, and rail slipping to 4.6% from 6%.The group reported UK London bus revenue growth of +1.3%, compared to +1.4% at the interims.Second half revenue in North America is benefiting from new contract wins, with LFL growth improving to -4.4% from the -5.5% at the half-year point thanks to contract wins.Virgin Rail Group delivered LFL revenue growth of +6.6%."Whilst management's outlook for full year profits is unchanged, we are concerned about the further weakening in UK Regional Bus, about 50% of group profits, and the limited remedies available," Investec analyst Alex Paterson said."We trim forecasts by 3%, cut our recommendation to sell and lower target price to 250p, from 300p, due to the decline in Regional Bus and lack of new rail opportunities."Investec has cut its full year operating profit forecasts by 2.5% in 2016 but raised its estimates for 2017 by 0.4% as it absorbs future benefits of lower fuel costs. Shore Capital has reiterated its 'buy' rating on challenger Shawbrook Bank on its belief the valuation of the specialist lenders sub-sector is wrong, with Shawbrook being valued at 10 times earnings despite 20% EPS growth forecast.Maiden final results from the bank since its 2015 initial public offer were better than expected, with an increase in adjusted pre-tax profit of 62% to £80.1m that beat consensus of £78.0m.This drove a 77% increase in adjusted EPS to 26.9p, or 26.3p if one excludes a one-off benefit to tax of £1.3m in respect of revaluation of deferred tax assets ahead of the implementation of the UK bank corporation tax surcharge in 2016.As Shawbrook pointed out, it does feel it will be badly affected by the incoming changes to stamp duty for buy-to-let budget property.But ShoreCap analyst Gary Greenwood stressed his concern than the challenger bank cannot continue to generate current return on equity (ROE) levels in the long term."We remain concerned that current banking returns are exceptional with substantially less impairment than at the peak of the economic cycle," he said"Competition remains muted but is picking up and margins are exceptionally high. Consequently, the current ROE being achieved by the new and specialist lenders is not sustainable in the long term.""While we are cautious about long term returns, we believe that this year and next year's volume growth will remain very strong at margins that are expected to deliver a very substantial economic profit for shareholders."With it being too early to call the top of the cycle, in his opinion, Greenwood said the market was wrong to price in a substantial recession. JP Morgan has recommended clients go 'underweight' on US stocks and as it sees an eventual recession bringing equities down some 30%.After equities, credit and commodities all rallied in the last three weeks, JP Morgan's global asset allocation team said it felt the "fundamentals of growth, earnings and recession risk have not improved, and if anything have worsened".With policy makers looking at a "near-empty ammo box", the team's 12-month-out US recession odds have risen to 1/3, while equity implied odds have instead fallen to near 1/5.Even if no recession materialises, US earnings are seen as rising only by low single digits."The strong rebound of the past few weeks does create near-term momentum, and thus keeps our first UW small. Low growth and easy money and the reduced potential for capital gains should raise the demand for income."JP Morgan's gloabl asset allocation now has a 5% underwight on equities, its first in the cycle, but still likes high-dividend stocks and is 'overweight' defensive sectors.However the main focus is on US high grade (HG) corporate bonds, given the 4%-plus yield being "a rarity in the HG world".Credit remains 'overweight' (OW), bonds are moved to 'neutral' and cash to 'OW'. Commodities stay 'UW' but a small -1%, given recent momentum and volatility."Given that our risk focus is now switching from Chinese debt to US corporate caution, we go OW EM equities. In Credit, OW US HG, US banks, and sterling HG against EUR and EM. In Commodities, be short gas oil and base metals but OW gold," the team explained.