Broker tips: Kier, Segro

(Sharecast News) - RBC Capital Markets initiated coverage of Kier at 'sector perform' on Tuesday, saying it offers attractive exposure to structurally supported UK infrastructure investment through 2035 - underpinned by an order book of around £11.6bn, sizeable framework positions and a diversified pipeline. The Canadian bank said construction group Kier has executed strongly since FY21, improving margins, building net cash, and achieving a record order book, re-rating shares to about 10x price-to-earnings from about 4x.

"Kier is well positioned to benefit from increasing UK infrastructure investment, but consensus factors in strong growth ex HS2, requiring continued execution and supportive end-markets," it said.

RBC pointed out that contractors are valued on balance sheet strength and while Kier's position has improved, leverage remains above peers.

"Clarity of underlying growth beyond GDP+ and a plan to accelerate de-leveraging would help to further re-rate the shares," added RBC, which set Kier a price target of 215p.

Berenberg lowered its target price on property developer Segro from 1,067p to 915p on Tuesday, but said there was "still plenty of growth to come".

Berenberg said Segro had capped off 2025 with "good operational momentum", delivering £49m in headline rent in the fourth quarter - its highest quarterly figure since Q120 - as it achieved a two-year high in occupancy at 94.9%.

The German bank, which reiterated its 'buy' rating on the stock, also highlighted that Segro had seen potential rental income from its pipeline climb to £62m - also its highest level in almost two years.

"Despite the clear market headwinds that have recently emerged, management remains confident in delivering growth - supported by: contractual rental increases and the capture of reversion on let space (UK: +16%; Continental Europe: +6%); a profitable development pipeline, with pre-let demand increasing (at a c7-8% yield on cost, or 10%+ on new money); as well as the potential kicker from data-centre-led growth over the medium term," said Berenberg.

Berenberg thinks Segro's shares offer "an attractive entry point" at their current level, down 8% year-to-date and trading at a 32% discount to 2026 EPRA net tangible assets per share, while also offering a 5.1% dividend per share yield for a 10.3% three-year total return compound annual growth rate.

"Our new 915p price target (from 1,067p) largely reflects changes to our estimates, as well as greater relative REIT sector volatility expressed through Beta. Despite this, we still see 41% upside," added Berenberg.