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UPDATE 1-Credit Suisse cuts Compass; upgrades 4 travel cos

Mon Sep 22, 2008 5:09am EDT

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Sept 22 (Reuters) - Credit Suisse made four rating changes within the UK travel and leisure sector, downgrading the world's biggest caterer Compass Group Plc (CPG.L), while upgrading bus and rail companies National Express Group Plc (NEX.L), FirstGroup Plc (FGP.L) and Arriva Plc (ARI.L).

European consumer spending is slowing, with UK history and recent surveys suggesting that consumers will reduce their spending on large-ticket capital goods, eating out, and alcohol and tobacco, the brokerage said in a note to clients.

It cut Compass to "neutral" from "outperform" and removed it from its focus list on strong outperformance and an expectation of slowing revenue growth, versus a market rating, which the brokerage believes reflects continued growth.

The brokerage also cut its price target on the British firm to 380 pence from 425 pence.

Credit Suisse said public transport was its preferred sub-sector, and raised ratings on its key picks National Express Group and FirstGroup to "outperform" from "neutral." It also raised Arriva to "neutral" from "underperform".

Taking price increases into account, demand for the running of cars will be substituted by an increase in demand for public transport, the brokerage said. (Reporting by Srikanth Srinivasa in Bangalore; Editing by Jarshad Kakkrakandy)



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