Analysts at Liberum nudged up their target price on construction tools and equipment hire firm Speedy Hire from 82.0p to 90.0p on Tuesday, stating the group’s strong balance sheet had boosted its outlook.
Liberum said Speedy’s March results were 6% better than it had expected, driven by stronger than expected margins.
The broker also highlighted that Speedy has continued to outperform the market helped by superior service and continuing to win back smaller customers.
“Speedy should benefit from the favourable construction outlook, boosted by market outperformance and options from its strengthened balance sheet,” said Liberum, which also reiterated its ‘buy’ rating on the stock.
“We see upside to our 90.0p target, set using ROCE/WACC, as returns improve and capital is redeployed.”
Analysts at Berenberg raised their target price on housebuilder MJ Gleeson from 840.0p to 900.0p on Tuesday after it became another in a long line of companies within the sector to upgrade full-year guidance.
Berenberg said MJ Gleeson’s upgrade, which formed part of a brief trading statement on Monday, was driven by price increases in housebuilding as the company closes the pricing gap towards fair market value, supported by price increases in the underlying market.
Alongside the “favourable pricing dynamic”, Berenberg thinks MJ Gleeson’s low-cost housing was “well-positioned” relative to demand and, as a result, that it can at least achieve its mid-term goal of 2,000 homes by the end of the 2022 trading year and get back to 30% gross margins by 2023.
The German bank did note that as MJ’s peers had already reported, cost inflation in recent months, particularly in specific raw materials such as timber, steel and plastics, had been increasing, with Gleeson not being immune by any means.
However, given the strong price increases and well-organised supply chains, Berenebrg stated this was not yet a problem for the group and stood by its ‘buy’ rating on the stock.
