Source: Sharecast
Berenberg said Renew’s “usual meet-and-beat earnings momentum story” gave way to management cautioning that it expected trading for the year to 30 September to be below previous market expectations.
In the context of a 9% adjusted underlying earnings downgrade to its FY25 forecasts, the shares fell by roughly 22% on the day, a move that Berenberg considers to be “overdone”, especially when considering that the shares had already drifted approximately 13% since 26 November.
“While short-term headwinds in the rail sector are a frustration, they distract from a provably strong management team and business model – operating margins remain resilient, returns are healthy, and the group’s decentralised compounder model has a significant runway to continue, supported by a less-than-0.1x levered balance sheet,” said the German bank, which reiterated its ‘buy’ rating on the stock.
"At just 11.5x FY25 P/E (10.5x FY26), on what we think are now comfortably positioned, if not conservative outer year forecasts, we think this offers an attractive entry point into a quality long-term story.”
Reporting by Iain Gilbert at Sharecast.com