FirstGroup shares are roughly the equivalent of a 'weak sell' on the FTSE 250 after full year results.
The bus and rail group produced a fairly 'in line' statement with the added bonus of a reduced net debt of £2.1 bn leading shares to rise on the FTSE 250 - shares are currently up 2.93 pct at 393.10p close of day.
However, Nomura, who have rated the business a 'reduce' rating or 'weak sell' say that plans to get debt down is 'still likely to take time'.
"Plans to reduce the high levels of debt also look sensible. However, we would argue that to get leverage down to sector averages is still likely to take time." the investment bank stated.
"On an EV/EBITDA basis the shares trade towards the lower end of the sector averages although don't appear overly inexpensive."
FirstGroup is currently stabilising and valuations have increased in the light of expected increased cash generation over the next few years.
"After two disappointing trading updates this year, the outlook in general appears to be stabilising." say the bank.
"We prefer Stagecoach. We leave our forecasts unchanged" added Nomura who give the price target of 375p.
Stagecoach, who also reported recently made similar profits to FirstGroup (albeit slightly less) but have debt levels much lower at £340.1m.
"Our price target assumes a 10 pct discount for the leverage (debt), which is still above sector averages." Nomura said, who also said that EPS were in line only.