Keller Group upgraded to “buy” at Deutsche Bank as shares slide 20% from May highs
Investing.com -- Keller Group Plc’s (LON:KLR) stock was upgraded to “buy” from “hold” by analyst Jonathan Coubrough from Deutsche Bank, who said the recent sell-off has been overdone. sending the stock up higher over 1%.
The price target remains unchanged at 1660p, while the shares last closed at 1310p.
Coubrough noted that since the downgrade earlier this year, Keller reported an interim performance that beat expectations on margins.
Despite that, the stock has fallen about 20% from its May highs. He said this has eased risks around current-year consensus forecasts, with easier comparatives in the second half of the year, particularly at its Suncoast division.
The company’s order book is at a record level, while shares are trading at about six times price-to-earnings, close to historic lows.
Coubrough forecasts Keller will move into a net cash position for the first time by fiscal year 2025, supporting a total distribution yield of 9%.
Keller is the world’s largest ground engineering specialist. Its revenue mix is spread across infrastructure at 33%, power and industrial at 27%, residential at 21% and commercial at 19%.
More than 70% of profit is generated in North America, where Coubrough said tendering and pricing remain strong, helped by demand linked to data centers.
“The group has DBe 0.5-1.5x EBITDA headroom within the leverage target to fund M&A and/ or continue returning surplus capital through buybacks,” Coubrough added.
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