National Express warned yesterday that profits would miss forecasts, leading some in the City to speculate that suitor Stagecoach may lower its offer price.<br /><br />Analysts took a knife to their forecasts after the troubled bus and rail operator admitted annual profits before tax would be “slightly below” its previous expectations. It blamed rising debt interest costs and problems at its North American school bus operation. Group revenues were down one per cent in three months to September from a year ago. <br /><br />Investec analyst Joe Thomas said: “We note that Stagecoach has not previously conducted due diligence on the North American operation, so the update may reduce the amount that it is willing to pay.”<br /><br />Stagecoach approached the company with an all-share merger proposal after a consortium led by Spain’s Cosmen family walked away from a takeover bid last week. National Express, which is still looking for a new chief executive, said yesterday it was evaluating the “value, risk and certainty” offered by the proposal. At the same time, it is pressing ahead with plans to raise up to £350m from a rights issue by the end of the year to reduce its £1bn debt mountain.<br /><br />“This is a good, profitable business that generates good cash flows,” said chief operating officer Ray O’Toole. He said there were “no immediate plans” to open the company’s books to Stagecoach.