FIRSTGROUP'S turnaround strategy has been given a vote of confidence by Goldman Sachs, which expects it to deliver strong earnings growth for the transport giant.
Analysts at the investment bank based their assessment on evidence of margin recovery at the Aberdeen-based company's UK bus and US school bus divisions.
"We also believe there is potential for divestments to create value," the bank added in a note for investors. "Indeed, management does not rule out pursuing opportunities to rationalise the portfolio of businesses.
"This could in turn lead to an improvement in the balance sheet structure and allow FirstGroup to refinance part of its debt at more attractive rates."
Goldman Sachs is forecasting revenue of £6.3 billion when it posts its third quarter trading update on January 21, compared with the £6.7bn booked by FirstGroup at the same stage last year, and earnings before interest and tax of £287m, up from £268m.
The investment bank updated its recommendation for FirstGroup to buy.
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