Jump aboard Stagecoach rather than Go-Ahead, says Shorecap

Broker Shore Capital welcomed transport group Go-Ahead's latest update but said it was keener on rival Stagecoach.Go-Ahead said in a first-quarter trading update on Tuesday that commercial and concessionary passenger numbers on its regional buses were broadly flat year-on-year, with weakness in the north east, although revenue rose 5%. It said overall trading had been robust and its annual expectations were unchanged.Shore said it remained a firm supporter of Go-Ahead and its strategy, but it said that it believed there was better value elsewhere in the sector, given the lack of rail franchise news likely in the near term.The broker said rival Stagecoach offered similar capital return potential, more geographical and operational diversification as well as more immediate upside potential in rail, with the East Coast franchise award due to be announced shortly."In our opinion, in order to reach £30 a share, Go-Ahead would need to increase its Target 100 towards Target 115-120, which seems unlikely in the near term or it needs to win both Transpennine and Northern franchises," Shore said."While the latter is most definitely possible, we do not expect an announcement in the near term."Shares in Go-Ahead rose 83p or 3.4% to 2529p at 12:35 in London while Stagecoach lifted 6p or 1.6% to 386.3p.