Berenberg pares back expectations for VP shares

(Sharecast News) - Analysts at Berenberg cut their target price on equipment rental firm VP from 905p to 800p on Wednesday as it took a fresh look at the broader UK business services market. Berenberg said VP holds market-leading positions within niche sectors of its infrastructure and construction end-markets, with smaller exposure to the housebuilding and energy markets, and noted that it operates predominantly in the UK, with some overseas exposure, operating through a series of brands including Groundforce, TPA, Torrent Trackside and Brandon Hire Station.

The German bank, which has a 'buy' rating on the stock, said VP's diversity of end-markets de-risks the group, combining resilient infrastructure exposure, backed by multi-year, committed public spend, with the more cyclical housebuilding and general construction markets.

"In our view, VP is performing robustly in the context of an overall weak macroeconomic backdrop, supported by ongoing infrastructure spending tailwinds, while it enacts a series of self-help measures to more closely integrate its brands," said Berenberg.

Berenberg said the change in target price was in order for it to reflect continued mixed market conditions, as highlighted in July's AGM statement, which it expects to have persisted.

"We see clear potential for VP to deliver far greater earnings growth should its cyclical

markets rebound. While awaiting this recovery, shareholders are rewarded with a growing DPS, currently yielding an attractive 7%," added Berenberg.

"VP's stock currently trades on an FY26E P/E of 8.3x or EV/EBITA of 7.9x. While current conditions signify that growth is modest, shareholders are generously rewarded with an attractive and sustainable dividend, currently yielding 6.8%, which has delivered a 30-year uninterrupted track record."

Reporting by Iain Gilbert at Sharecast.com