- Balfour Beatty
- 09 September 2025 11:28:13
Source: Sharecast
Berenberg said it was clear that Balfour Beatty has undergone "quite a significant transformation" in recent years and it was now on "a much firmer footing".
The German bank said Balfour Beatty was now pricing and structuring contracts "far more sensibly" than it has done historically, which should result in "a more reliable earnings stream" in the coming years. It also said Balfour Beatty's balance sheet was "in good shape" and that the firm's valuation was underpinned by the investment portfolio.
Berenberg noted that aside from the key focus remaining on the ongoing delivery of steady cash-backed profit growth and the prospect for more shareholder returns, it also highlighted growth opportunities across the UK energy landscape, especially in transmission and generation, as well as growth and new opportunities in UK defence markets and a continued uptick in the US construction order book, with a focus on the Buildings business.
Berenberg, which has a 'buy' rating on the stock, added that Balfour trades on a 12.2x full-year 2026 price-to-earnings ratio, at 5.4x EBITDA and 7.1x EBIT.
When discussing the sector as a whole, Berenberg pointed to "an unhelpful economic backdrop" and "a mixed reporting season" for UK housebuilders, but noted that housing starts were now growing in 2025 – underpinning its view that "a slow and steady recovery" was underway.
In addition to the Balfour Beatty price target increase, Berenberg lowered its target price on Ibstock from 200p to 170p, raised Kier Group's target from 210p to 225p, and upped Volution from 700p to 720p. The analysts added that Taylor Wimpey remained their top pick.
Reporting by Iain Gilbert at Sharecast.com