Broker snap: Aggreko makes 'good start' but no upgrades yet, says Jefferies

12th Apr 2013 09:39

There will be no upgrades yet for Aggreko after a decent first quarter, but upside risk is building, according to Jefferies which reiterated its 'buy' rating and 2,200p target price for the stock.Underlying revenue growth in the first quarter was 8.0%, the company said on Friday morning, well ahead of Jefferies' +2.0% forecast, with both the Power Projects and Local Business divisions beating estimates.However, the broker said: "Although revenue growth is tracking ahead of expectations there will be contracts rolling off in Japan and as a result it feels too early to upgrade expectations."The Local Business division has had a good start to the year, growing revenues by 10% (Jefferies forecast: +2.0%). "This is the area where, if growth continues at this rate, consensus expectations would appear too light," the broker said.Nevertheless, for the time being, Jefferies expects no change to full-year consensus estimates for £341m of adjusted profit before tax and 94.9p of earnings per share (EPS)."We estimate that the new strategic plan implies a five-year 15% EPS compound annual growth rate (CAGR), Currently, given a weak 2013, our forecasts show a FY12-15F EPS CAGR of 4.0%. On this basis, when considering management's track record of meeting and exceeding plans, we feel that there is upside risk to forecasts."The stock was up 1.59% at 1,789p by 10:18 on Friday.BC