OCBC Investment Research upgraded ComfortDelGro Corp Ltd to 'buy' from 'hold' and raised its target price to S$1.90 from S$1.60, citing better prospects for the transport operator in 2013.
ComfortDelGro shares were up 1.15 percent at S$1.76 on Wednesday. The stock has gained 24 percent this year, outperforming the 18 percent gain in the broader Straits Times Index.
ComfortDelGro's bus operations in Singapore are seen turning around gradually in fiscal year 2013 on the back of the Bus Services Enhancement Programme (BSEP) and its related subsidies, as well as the likelihood of a fare hike, OCBC said.
Under BSEP, the Singapore government is partnering with bus operators to increase bus capacity and improve services.
Fuel prices are likely to remain subdued in 2013 and with substantial hedges in place, ComfortDelGro is well-positioned to benefit from any additional dips, OCBC said.
The Downtown Line project in Singapore is expected to boost ComfortDelGro's ridership, OCBC said, adding that acquisitions and strategic moves overseas will allow the company to continue enjoying stable revenue and operating profit contributions.
1020 (0220 GMT)