Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Berenberg initiates coverage on Kier and Keller at 'buy'

(Sharecast News) - Analysts at Berenberg initiated coverage on construction groups Keller and Kier on Friday, taking a positive stance on both stocks. Berenberg started Keller off with a 1,250.0p target price and a 'buy' rating, stating the group was now "refocused and on solid ground".

"After years of the business being increasingly global, in recent years Keller has been reducing its geographic footprint and has focussed on deepening its product set and capabilities - rather than concentrating on adding breadth to the business," said Berenberg.

"By its nature, the company's margins are low - albeit higher than most general contractors - and somewhat volatile at times; however, we think that its North American exposure is a key differentiator, while its cash generation provides it with strategic options and the stock is cheap."

As far as Kier, Berenberg initiated coverage with a 210.0p target price and another 'buy' rating, telling clients that the "heavy lifting" was now done.

The German bank saiid that after "a troubling few years", what now remains is a core focus on the infrastructure, construction, highways, property and utilities businesses, leaving "a much simpler and more disciplined group".

"The crux of the investment case is that the initial stages of the turnaround have shown promise and cash generation has improved markedly. We estimate that in FY June 2025 the business should deliver adjusted EBIT north of £150.0m and FCF (after interest, capex, exceptionals and so on) just below £100.0m," said the analyststs.

"Using average net debt, that would leave the stock trading on 5.3x EBIT with a 16.4% FCF yield - that is, delivering to the existing plan consistently should warrant a material rerating."

Reporting by Iain Gilbert at Sharecast.com

Share this article

Related Sharecast Articles

Billionaire Issa nearing deal to sell Asda stake to TDR Capital - report
(Sharecast News) - US private equity firm TDR Capital is reportedly closing in on a deal to buy petrol station billionaire Zuber Issa's stake in supermarket chain Asda.
Billionaire Issa nearing deal to sell Asda stake to TDR Capital
(Sharecast News) - Private equity firm TDR Capital is reportedly closing in on a deal to buy petrol station billionaire Zuber Issa's stake in supermarket chain Asda.
DS Smith tumbles as Mondi abandons pursuit
(Sharecast News) - DS Smith tanked on Friday after Mondi said it would not be making an offer for the rival packaging group, clearing the path for a takeover by International Paper.
Eqtec agrees amendment to Verde subscription
(Sharecast News) - Waste-to-energy technology developer Eqtec updated the market on the Verde Corporation subscription on Friday, confirming that an amendment to the subscription letter had been agreed upon with Verde.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.