One to Watch

FIRSTGROUP is the largest UK bus operator and also has various rail franchises including ScotRail. In the US, the bus interests include Greyhound and the "yellow buses" used for school runs. The latest trading update from FirstGroup, ahead of the preliminary results on 12 May, has prompted analysts to downgrade their forecasts and further undermined sentiment. So with moderate earnings growth forecast for this year, as opposed to growth of about 15 per cent estimated prior to the announcement, should existing shareholders sit tight, sell or "top up" their shareholdings on weakness? The shares are unlikely to rally until evidence of an improving trading outlook appears. Yet FirstGroup is operating in markets that have growth potential and it is well positioned to expand its presence in the highly fragmented US school bus market. As a result, I consider that existing shareholders should sit tight for the time being. There are just too many uncertainties involved to merit increasing holdings. The value of your investments may fall and you may get back less than you invested. This does not constitute investment advice and you should take professional advice regarding the suitability of this company for your portfolio. Marks & Spencer 377.9p +6p Broker says SELL KBC Peel Hunt carries a "Sell" recommendation on Marks & Spencer ahead of tomorrow's full-year results from the iconic high street clothing and food retailer. The broker said: "Unless we see a major departure from market forecasts, we expect the shares to continue to tread water until new chief executive Marc Bolland starts." Valiant Petroleum 665p +16p Broker says BUY VALIANT Petroleum is "gaining momentum", according to Canaccord Adams, which kept its "Buy" rating but lowered its target price from 667p to 662p. The broker said: "Our net asset value estimate does not assign value to the group's potentially transformational exploration upside."