FRIDAY MARKET CLOSE: Go-Ahead races past rival FirstGroup

Shares in transport group Go-Ahead gathered steam after its majority-owned subsidiary beat rival FirstGroup to win a new mega-rail franchise.

The stock was the biggest climber on the main market, jumping 9 per cent or 174p to 2,113p after its joint venture Govia was handed the Thameslink, Southern and Great Northern franchise.

Investec analyst John Lawson hiked his price target for the shares by more than £3, saying: “This is a major coup for Go-Ahead as, not only does it give the group certainty over its rail earnings for a number of years, but it brings forward the day when we might expect a dividend increase.”

Hide Ad
Hide Ad

Aberdeen-based FirstGroup, which lost out, initially fell 4 per cent on the news but recovered to close 1.7p higher at 136.5p.

FirstGroup had been running a section of this operation under the First Capital Connect banner since 2006, but that operation will disappear when the new seven-year franchise starts in September 2014.

The FTSE 100 Index spent the session in the red as traders took a cautious approach ahead of the long weekend, which will feature elections in the EU and Ukraine. But with the 6,800 level providing solid support, the index trimmed its losses during the afternoon to close just 4.81 points lower at 6,815.75.

Shares in Tullow Oil fell 1.2 per cent after the driller said one of its wells in Ethiopia hit water. The stock has lost more than a third of its value since 2013 following a string of disappointing exploration updates, and closed a further 10.5p lower at 841p.

Luxury group Burberry found itself on the top-flight fallers’ board after a price target cut and gloomy comments by broker Exane reignited concerns about the brand. The shares slipped 26p to 1,503p.