MCG: Recalibrated Price Outlook Will Support Renewed Confidence In Future Upside Potential

Analysts have trimmed their price target on Mobico Group to 30 GBp from 35 GBp, reflecting more cautious assumptions on the near term risk reward while maintaining a neutral stance on the shares.

Analyst Commentary

Bullish analysts view the maintained neutral rating and modestly reduced price target as a signal that the stock still offers reasonable value relative to its fundamentals, even as near term expectations are tempered.

They point to the updated target as an attempt to better align valuation with execution risks, rather than a wholesale change in the long term investment case.

Bullish Takeaways

• Bullish analysts highlight that, despite the lower target, the new level still implies some upside from current trading levels, suggesting that longer term growth and margin recovery potential remain in play.
• The decision to keep a neutral stance rather than move to an outright negative view is seen as evidence that operational challenges are considered manageable within the existing business model.
• Some investors may interpret the recalibrated target as having de risked expectations, potentially creating a more attractive entry point if management can execute on cost control and revenue initiatives.
• The updated valuation framework is viewed as more realistic, which could support a more stable share price if the company meets or modestly exceeds reset forecasts.

Bearish Takeaways

• Bearish analysts see the target reduction as a signal that near term earnings visibility has weakened, with execution risks around cost inflation, demand normalization, and contract profitability weighing on the outlook.
• The narrower implied upside suggests limited scope for multiple expansion until the company can demonstrate consistent delivery against financial and operational targets.
• Concerns persist that any delays in improving cash generation or reducing leverage could constrain strategic flexibility and cap valuation in the medium term.
• The maintenance of a neutral rating, coupled with a lower target, reinforces the view that the shares may remain range bound until there is clearer evidence of sustainable growth and margin improvement.

What's in the News

• ALSA, Mobico Group's subsidiary, secured an eight year, capital light joint venture contract in Saudi Arabia worth approximately €500 million. It will operate 156 vehicles, mostly electric, to serve the new Qiddiya city near Riyadh and expand Park and Ride and shuttle services in the region (Key Developments).
• Mobico Group announced that Deloitte LLP resigned as the company's auditor, with the resignation taking effect on 19 September 2025 (Key Developments).
• The company appointed KPMG LLP as its new auditor, effective 26 November 2025, marking a planned transition in its external audit relationship (Key Developments).
• Mobico Group is changing its accounting reference date and financial year end from 31 December to 31 March, effective 26 November 2025. This will alter the timing and comparability of future financial reporting periods (Key Developments).

Valuation Changes

• Fair Value Estimate remains unchanged at £0.37 per share, indicating no revision to the intrinsic value assessment.
• The Discount Rate is stable at 13.2 percent, reflecting no change in the perceived risk profile or cost of capital assumptions.
• Revenue Growth is effectively unchanged at around negative 6.3 percent, with only immaterial model refinements applied.
• The Net Profit Margin is flat at approximately 6.3 percent, with rounding differences too small to affect the valuation narrative.
• The Future P/E is steady at about 1.8x earnings, implying no shift in the forward earnings multiple applied to the shares.