Source: Sharecast
Berenberg said Ashtead's share price has "hit the trough", in its view, and thinks there are catalysts that could lead to upside risk to FY26 guidance. Berenberg, which reiterated its 'buy' rating on Ashtead, also said growth and margin drivers remained strong in the mid-term.
"We cut our price target for Ashtead from £70 to £60 on the back of our lower growth forecasts for FY 26, primarily due to construction environment uncertainty, but remain bullish about the group's upside potential," said Berenberg.
The German bank noted that Ashtead underperformed its peers in 2024, but said much of this was due to high end-market exposure to local markets, while the other limiting factor appeared to be soft acquisition spend.
"We think this could be a sign of another share buyback, which could limit the impact of index outflows from Ashtead's planned Q126 US listing," noted Berenberg.
The analysts also highlighted that the stock trades on a seven times enterprise value to underlying earnings ratio for the next twelve months - a 10% discount to its five-year history and a one-turn discount to rival United Rentals.
Reporting by Iain Gilbert at Sharecast.com