Barclays upgrades Aggreko, says bad news is priced in

10th Aug 2015 09:04

(ShareCast News) - Temporary power provider Aggreko got a boost after Barclays upgraded the stock to 'overweight' from 'equalweight'.It said the majority of possible bad news has materialised, the revised strategy is sensible and this is likely to prove one of the lowest valuations relative to the market investors will experience across the economic cycle."In fact, our view is the degree of negative sentiment means growth doesn't even need to hit management's predictions of mid-single-digit revenue growth and 20% EBITA margins for the shares to offer upside," said the bank.Barclays said there remains some risk to earnings in the near term from direct exposure to oil and gas end markets and indirectly from customer sentiment linked to low commodity prices. In addition, questions over Power Projects in the longer term are likely to remain.There could also be execution risk on the changes being implemented as part of the new strategy, said the bank.Barclays cut its price target on the stock to 1,280p from 1,700p as the bank uses multiples below the long-term average which are more akin to the pre Power Projects era.At 0910 BST, Aggreko shares were up 1.7% at 1,109p.