At least that might be the case for National Express, whose East Coast Mainline franchise has been particularly badly hit of late, with the possibility of the Government taking control.

But shares in the group rose 21¼p to 320p yesterday after Morgan Stanley suggested that the transport group may have an opportunity amid the adversity if it scrapped its UK rail business and just focused on buses.

The US investment bank calculates that exiting its rail business would cost the company only £6 million more than the £169 million impact that sticking it out is likely to have.

It added that coupled with a rumoured rights issue at about the £400 million mark, which would lower its leverage to about the sector average, the group’s valuation could look very attractive at 7.7 times earnings.

Given that Morgan Stanley believes that with no further concerns about rail or for its balance sheet a valuation of ten times earnings would be justified, it has upgraded the stock to “overweight”.

However, it has cut earnings forecast for the sector by 6 per cent for 2009-10 and by 11 per cent for 2010-11, because of a more pessimistic forecast for UK rail. It now expects passenger growth to fall by 4 per cent rather than 3 per cent, although this is offset by more optimistic assumptions on bus passenger growth of minus 1 per cent rather than a fall of 3 per cent.

The bank has subsequently downgraded both Go Ahead, up 14p to £12.71, and Stagecoach, down 5¼p to 122¾p, to “underweight”. However, it has upgraded its rating on FirstGroup, up 4¼p to 372¾p, to “equal weight” because of its North American school bus contracts.

Overall, the FTSE 100 index fell 28.69 points to 4,387.54 as investors grew more cautious about the state of the global economy.