National Express Group Share Price Forecast September 2021 – Time to Buy NEX?
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Shares of British multinational public transport company National Express Group (LSE: NEX) are in the green today, after closing at 240p as of September 21st (18:43 UTC+1). The coach services provider which is a part of the FTSE 250 has been rumoured to be in the midst of a merger with transport operator Stagecoach.
National Express Group – Technical Analysis
According to National Express Group’s financial statement, the market cap of the company is at £ 1.367 billion with total assets worth £4.285 billion. Revenue for 2020 was at £1.96 billion with a profit margin of -16.96% compared to £2.74 billion in 2019.
Moving averages for National Express Group such as Exponential Moving Average (100)(262.6), Simple Moving Average (100)(269.5), Exponential Moving Average (200)(264.5) and Simple Moving Average (200)(276.7) are indicating a sell action. On the flip side, oscillators such as Relative Strength Index (14)(47.3), Stochastic %K (14, 3, 3)(28.8), Commodity Channel Index (20)(−11.8) and Average Directional Index (14)(35.2) are mostly neutral.
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Recent Developments
National Express has made immense progress in securing contracts worth £900 million in what many described as a “poor” year for business. The contracts include multi-year deals for markets in Portugal, an employee shuttle contract in the United Kingdom and school bus contracts in North America. There are 29 electric buses in its fleet in England’s West Midlands. The company has also secured a contract to provide hydrogen-powered bus services in Birmingham that is expected to start later this year. The company is well on track to reach zero carbon emission by 2030.
The biggest news coming out of National Express Group right now is the merger with Stagecoach. Stagecoach investors will receive 0.36 of National Express shares for each share held according to the terms of the proposed agreement. The shares of both the companies have rallied on the news amidst very troubling times for the worldwide travel industry. While National Express Group shares have risen by 707%, stagecoach has seen bigger gains at 21% since yesterday.
Continued uncertainty regarding the pandemic has prevented National Express Group shares from surging. Its share price has fallen by 21% in the last 6 months. The company’s operating profits have improved for the half-year ending June 30th compared to the same period before. However, revenues have remained flat due to cost-saving measures. The merger with stagecoach worth £35 million can result in more savings in costs. National Express Group expects almost one-third of these to come from areas such as back-office processes and other duplicate costs related to IT.
Should You Buy NEX Shares?
As good as the news above looks, investors still have to consider some risks as well. Stagecoach has been a declining company for years now. National Express will also have to strive hard to reach pre-pandemic levels. However, the UK’s decarbonisation of its transport system will require public transport to play a major part. This suggests that demand for the company’s services will only go up in the long run.
NEX shares may not be suitable for all investors. Its recovery is still in the early stages which could be pushed back several months if another lockdown is announced. Rising wage and fuel costs can also hinder its recovery. The best thing for National Express investors to do right now would be to hold on to their shares until there is further clarity on the merger. Considering all this now is not the time to buy NEX shares.
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