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(Sharecast News) - Analysts at Berenberg hiked their target price for Balfour Beatty from 870p to 1,070p on Thursday, citing a materially stronger balance‑sheet position and upgraded earnings expectations following a robust first‑half performance.
Berenberg kept its positive stance on the Balfour Beatty's core earnings‑based businesses, applying a higher 11.2x FY26 EBIT multiple after what it called "good delivery".
Balfour Beatty posted a notably strong H1 on Wednesday, with profits from earnings‑based businesses up 42% to £153m. Construction services revenue rose 8% to £4.54bn, while underlying profit from operations jumped 40% to £87m, lifting margins to 1.9% from 1.5%. UK construction revenue was flat at £1.57bn, while US construction revenue surged 19% to £2.48bn, swinging from an £11m loss to a £22m profit - something Berenberg said was central to the firm's step‑up in performance.
Support services also impressed, with revenue up 10% to £727m and profit rising 43% to £66m, expanding margins to 9.1%. Management upgraded full‑year guidance for earnings‑based businesses to low double‑digit growth, ahead of its previous high single‑digit outlook.
Berenberg said Balfour Beatty was now at an "interesting strategic juncture", highlighting three areas - the potential to scale US operations further, the strengthened average net‑cash position, and opportunities to unlock more value from its investment portfolio over time.
The German bank noted that Balfour Beatty shares traded on 17.9x FY26 price-to-earnings ratio, 7.1x EBITDA and 8.9x EBIT, and said its upgraded price target reflected both improved fundamentals and clearer medium‑term growth pathways.
JPMorgan upgraded Aviva on Thursday to 'overweight' from 'neutral' and reiterated its 'overweight' stance on Standard Life, noting that factors including corporate restructuring and M&A speculation have led UK life insurers to outperform the Stoxx 600 insurance index and the FTSE 100 index by two percentage points and six percentage points, respectively, year to date.
"Aviva is the exception: it has lagged and de-rated versus its peers, and we believe it now offers attractive relative upside potential," JPM said. "Cash flow and capital returns is where the relative value debate on these stocks is clearest, with IFRS earnings a poor guide to free cash.
"We analyse the Solvency II operational capital generation (OCG) that may be returned to shareholders without eroding Solvency II ratios - or 'economic OCG'- as a proxy for FCF."
JPM said Aviva and Standard Life are generating better FCF yields on this basis, with superior capital return potential and dividend cover.
"Two additional debates reinforce our views: rising competition and weaker new business margins in the UK PRT (Pension Risk Transfer) market, to which L&G is most geared, while UK retail general insurance pricing trends are stabilising / turning more positive, supporting Aviva."
The bank lifted its price target on Aviva to 800p from 715p, while the PT for Standard Life was upped to 1,075p from 975p.
