Broker snap: Aggreko provides 'welcome' update, says Investec

16th Dec 2013 08:59

Aggreko investors "should be able to sleep slightly easier tonight", according to Investec, which reiterated its 'hold' rating for the stock after the firm's reassuring trading update on Monday.The temporary power and temperature control specialist said that full-year results are likely to be "slightly ahead of expectations" with underlying revenues for 2013 forecast to rise 3% year-on-year. Trading profit is likely to be unchanged on 2012.Investec said it expects to increase its pre-tax profit forecast for this year from £330m to £335m, due entirely to the reduction of a bad debt provision.The company said that net debt is expected to be "below £400m" by the end of the year, well under Investec's £430m estimate."Aggreko's interim management statement should be seen as a welcome update, at first glance in any event, with no warning on profits (indeed the reverse, helped by a small provision release) and a year-end net debt position better than we expected," said analyst John Lawson."Whilst the improved financials are in part due to cash from a bad debtor and a slight shift to the right of some planned capex, it does highlight that the group is paying down its debt rapidly [...] We expect a better day for the stock."Investec maintained its 1,650p target price for Aggreko's shares.BC